Fed Governor presents FedNow as a possible alternative to CBDC creation

The Federal Reserve is considering a payment system that could reduce the need for a central bank digital currency (CBDC)

Federal Reserve touts benefits of FedNow

Michelle W. Bowman, governor of the Federal Reserve, made several comments on the subject during a press conference at VenCent Fintech in Little Rock. In her speech, she said the Federal Reserve is developing a service called FedNow, a payment service that caters to depository institutions.

Bowman said FedNow “addresses the questions that some have raised about the need for CBDC“. FedNow is not based on a stablecoin or a government-issued CBDC. However, it serves a similar role in that it will allow financial institutions and customers to use a service in competition with other payment providers.

Bowman stated that the completion of FedNow is a “high priority” and stated that the service should be ready by mid-2023. Development of the project began in 2019, and recent reports suggest that the Federal Reserve has found participants and launched a pilot program.

Read:  Pro-Russian authorities of Lugansk, Kherson and Zaporiyia ask Putin to accept their annexation to Russia

While early comments from Michelle W. Bowman suggest that FedNow reduces the need for CBDC, the two efforts could be complementary. Bowman added that the Federal Reserve is considering whether a CBDC “could fit into the future monetary and payments landscape of the United States” even as it assesses the benefits of FedNow.

Michelle W. Bowman also commented on crypto-assets in general, noting that the Federal Reserve has witnessed “significant consumer demand” for banks to provide crypto services. She stated that these trends have likely caused banks to want to better understand and facilitate these services for their customers.

She added that banks have seen some customer deposits go to crypto companies, noting that banks “Would like to stem this leakage“by offering services that compete with the crypto industry.

Read:  Federal Reserve raises benchmark interest rate by 0.25%, disinflationary process underway, says Jerome Powell

Bowman warned that banks must consider the risks of offering crypto services. She said the Federal Reserve is creating supervisory expectations for banks on issues such as custody, buying, selling and lending of crypto-currencies, as well as issuing stablecoins.

Yesterday, the Federal Reserve issued information on these issues in a press release.

The Federal Reserve has long been at the center of CBDC development and other crypto-currency regulations. Earlier this year, the government agency delivered a report on CBDCs that weighed the costs and benefits of such an asset.

The government agency has also been responsible for multiple interest rate hikes this year, the latest of which came in late July and apparently boosted crypto prices.

The Best Online Bookmakers February 25 2024

BetMGM Casino