The Marriner S. Eccles Federal Reserve Board Building in Washington, DC
Sarah Silbiger | Reuters
The Federal Reserve’s digital payment system, which it promises will help speed up the movement of money around the world, will be launched in July.
FedNow, as it will be known, “will create a state-of-the-art payment system that is resilient, adaptable and accessible,” said Tom Barkin, President of the Richmond Fed, who is the program’s executive sponsor.
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In line with the program’s goals, the system will allow bill payments, money transfers such as paychecks and government withdrawals, and a variety of other consumer activities to be processed more quickly and at lower cost.
According to a Fed announcement, participants will complete a training and certification process in early April.
“As launch nears, we urge financial institutions and their industry partners to move ahead with preparations to join the FedNow service,” said Ken Montgomery, program director and first vice president at the Boston Fed, which spearheaded the project under former Boston Fed President Eric Rosengren.
Institutions participating in the program have access 24 hours a day, seven days a week, as opposed to a current system that is closed on weekends.
Proponents of the program say it will bring money to people much faster. For example, they said, government payments like those issued in the early days of the Covid pandemic would have credited accounts instantly rather than the days it would have taken to reach most people.
Some Fed officials say the program could even replace the need for a central bank digital currency.