FedNow launch imminent: Key details finally revealed

TL;DR Breakdown

  • The U.S Federal Reserve is set to launch FedNow, a service allowing real-time fund transfers 24/7.
  • FedNow will partner with 41 banks and 15 service providers initially, including major and community banks.
  • The system allows direct settlements in central bank accounts, different from intermediary services like PayPal.

Description

The much-anticipated FedNow service, the product of the U.S. Federal Reserve’s painstaking endeavors, is primed for an imminent launch. Positioned to revolutionize the United States payment system, FedNow promises instant fund transfers 24/7 for all Americans. This major leap forward aims to streamline transactions and put an end to the multi-day waiting period that’s been … Read more

The much-anticipated FedNow service, the product of the U.S. Federal Reserve’s painstaking endeavors, is primed for an imminent launch. Positioned to revolutionize the United States payment system, FedNow promises instant fund transfers 24/7 for all Americans.

This major leap forward aims to streamline transactions and put an end to the multi-day waiting period that’s been a bottleneck in domestic financial exchanges.

Bringing real-time payments to the forefront

FedNow’s conception dates back to 2019, and its impending inauguration aligns the U.S with nations like the UK, India, Brazil, and the EU that have leveraged similar facilities for years.

In the initial phase, the system has been authorized for 41 banks and 15 service providers, featuring both community banks and substantial lenders like JPMorgan Chase, Bank of New York Mellon, and US Bancorp.

The Federal Reserve has plans to add more banks and credit unions to this elite list in due course. Pitted against private sector real-time payments networks such as The Clearing House’s RTP network, FedNow had faced initial resistance from major banks.

However, these institutions are now embracing the system, recognizing its potential to enhance the suite of services they provide their clientele. “FedNow represents a new dimension of reach extension,” said Anu Somani, who helms global payables and embedded payments at U.S. Bank.

Contrasting popular peer-to-peer payment methods like PayPal and Venmo, which merely act as banking go-betweens, FedNow facilitates direct settlements in central bank accounts.

The Federal Reserve operates another real-time payments mechanism called FedWire, but its use is restricted to significant corporate transactions and only during standard business hours.

Building a competitive edge with FedNow

With FedNow, smaller entities, including consumers and small businesses, stand to gain significantly. Carl Slabicki, BNY Mellon’s Treasury Services global co-head of payments, mentioned, “We want our clients to leverage these capabilities as a competitive edge for us.”

Smaller banks had advocated the creation of FedNow, envisioning it as a means of accessing real-time payments without the overhead of fees to larger competitors.

Though FedNow is a free service for consumers, how banks might offset any associated costs remains unclear. Certain market participants expressed concerns over FedNow potentially triggering a bank run due to the system’s speedy fund outflows.

Regardless, the Federal Reserve officials dismissed these apprehensions, contending that banks have adequate measures to counteract massive outflows.

Commencing operations, FedNow will implement a maximum payment cap of $500,000, which banks may adjust lower as necessary.

The Federal Reserve has made clear that FedNow, promising real-time gross settlement (RTGS) and instant fiat payments, bears no relation to central bank digital currencies (CBDCs).

This clarification came as it declared the FedNow service ‘ready’, following successful testing with multiple financial institutions, 15 service providers, and the U.S. Department of the Treasury.

The Federal Reserve plans to incorporate all of the U.S’s 10,000 financial institutions in due course, indicating a broad scope for the FedNow service.

Notably, the integration of Metal Blockchain into FedNow was announced on May 11. Developed by Metallicus, Metal Blockchain is based on a fork of Avalanche’s code, allowing rules to be established for asset transfers.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

文章来源于互联网:FedNow launch imminent: Key details finally revealed

Disclaimers:

1. You are solely responsible for your investment decisions and this info is not liable for any losses you may incur.

2. The copyright of this article belongs to the writer, it represents the writer's opinions only, not represents the site's ones. Not financial advice.

Previous 2023年7月21日 01:21
Next 2023年7月21日 03:18

Related articles

  • Bank of Korea announces three regions for CBDC pilot program

    TL;DR Breakdown The Bank of Korea has recently revealed the location where the pilot test of its CBDC will take place. Leveraging local currency schemes for seamless integration. Description The Bank of Korea recently revealed its plans to pilot its central bank digital currency (CBDC) in three regions, bypassing the country’s capital, Seoul. The selected regions for the “private target CBDC test bed” are Jeju, Busan, and Incheon, which will serve as experimental grounds for the new digital currency. The primary objective of the … Read more The Bank of Korea recently revealed its plans to pilot its central bank digital currency (CBDC) in three regions, bypassing the country’s capital, Seoul. The selected regions for the “private target CBDC test bed” are Jeju, Busan, and Incheon, which will serve as experimental grounds for the new digital currency. The primary objective of the pilot program is to explore the practicality and feasibility of using CBDCs in real-world scenarios. The Bank of Korea plans full implementation in one region The Bank of Korea aims to eventually choose one of these regions for…

    Article 2023年8月1日
  • Banking bonanza: BlackRock goes after lucrative deals

    TL;DR Breakdown BlackRock is ready to capitalize on the ongoing banking sector turmoil, intending to purchase more assets offloaded by banks. Vice Chairman, Gary Shedlin, views this as an opportunity for BlackRock and its clients. Shedlin also anticipates a new era in banking where banks adopt an “originate-to-distribute” model, leading to more asset sales to investors. Description Brimming with opportunistic zeal, BlackRock, the global asset management giant, is sizing up the banking arena’s ongoing turbulence and licking its lips at the prospect of scoring some lucrative deals. The shifting landscape of high-interest rates, stringent regulations, and potential mergers serves as the backdrop to BlackRock’s strategic game plan, one that capitalizes on banks’ … Read more Brimming with opportunistic zeal, BlackRock, the global asset management giant, is sizing up the banking arena’s ongoing turbulence and licking its lips at the prospect of scoring some lucrative deals. The shifting landscape of high-interest rates, stringent regulations, and potential mergers serves as the backdrop to BlackRock’s strategic game plan, one that capitalizes on banks’ desperation to offload assets and bolster their capital and liquidity…

    Article 2023年7月26日
  • U.S. sanctions against Tornado Cash ruled unlawful

    TL;DR Breakdown The Blockchain Association and the DeFi Education Fund have joined forces to express their support for Coin Center’s lawsuit against the U.S. Treasury regarding the imposed sanctions on Tornado Cash. According to the associations, OFAC lacks the statutory authority to sanction software like Tornado Cash. The Treasury has argued that crypto mixers like Tornado Cash pose a national security threat and have failed to implement adequate measures to prevent money laundering.  The Blockchain Association and the DeFi Education Fund have joined forces to express their support for Coin Center’s lawsuit against the U.S. Treasury regarding the imposed sanctions on Tornado Cash. The two cryptocurrency industry advocacy groups filed a joint amicus brief, arguing that the sanctions imposed by the Treasury’s Office of Foreign Assets Control (OFAC) are both unprecedented and unlawful. According to the associations, OFAC lacks the statutory authority to sanction software like Tornado Cash. They contend that Tornado Cash is a decentralized protocol and cannot be owned by anyone. While acknowledging that there have been instances of malicious use of the protocol for money laundering, including…

    Article 2023年6月9日
  • Why Mark Cuban feels 99% of crypto tokens will go broke?

    TL;DR Breakdown Mark Cuban and John Reed Stark, had a detailed Twitter conversation about the future and regulation of cryptocurrencies. The entrepreneur likened the struggles of small crypto startups to a child trying to operate a lemonade stand under extensive licensing laws. He also predicted that 99% of crypto tokens would fail, much like early internet companies, but the survivors would be game changers. An impassioned exchange unfolded recently in the Twitter universe, featuring two influential personalities with contrasting views on the promising yet controversial domain of cryptocurrencies. The sparring partners: former Chief SEC Office of Internet Enforcement, John Reed Stark, and entrepreneur, investor, and anticipated presidential candidate, Mark Cuban. In a dialogue touching on numerous aspects of crypto regulations, the capabilities of blockchain technology, and the role of the SEC, Cuban posited a statement that sent ripples through the world of digital currencies, saying 99% of crypto tokens were destined for bankruptcy. A debate between titans: Cuban vs Stark The conversation began with a tweet from Stark referencing a U.S. District Judge’s preference for Binance and the SEC to…

    Article 2023年6月18日
  • U.S. banks now hold over $3 trillion in cash but there’s a catch

    TL;DR Breakdown U.S. banks currently hold over $3 trillion in cash, a strategic response to an unpredictable financial climate. March saw significant bank failures, including Silicon Valley Bank and Signature Bank, causing trust issues in the financial sector. Credit agencies, like S&P and Moody’s, downgraded several U.S. banks, further challenging the sector’s stability. Description The latest financial reports are revealing a remarkable trend: U.S. banks are currently sitting on an eye-watering sum of over $3 trillion in cash. The reasons for this financial strategy are varied and deeply interconnected, stemming from a cautious approach to an unpredictable economic climate and recent bank failures. Springtime’s Ghosts Still Haunting the Financial … Read more The latest financial reports are revealing a remarkable trend: U.S. banks are currently sitting on an eye-watering sum of over $3 trillion in cash. The reasons for this financial strategy are varied and deeply interconnected, stemming from a cautious approach to an unpredictable economic climate and recent bank failures. Springtime’s Ghosts Still Haunting the Financial Realm The banking sector, clearly, hasn’t forgotten the recent shocks it endured. March’s…

    Article 2023年9月6日
TOP