The US Federal Reserve is currently developing a new payment system that will let financial institutions of all sizes in every community across the US to provide safe and efficient instant payment services in real-time, a service to be launched in mid-2023, according to Fed’s recent release.
It must however be noted that FedNow is not a blockchain-based payment solution like cryptocurrencies, although the payment service is seen as a step towards the rollout of CBDC as noted by Fed Vice Chair, Lael Brainard.
In the press release by Jerome’s Fed on August 29, the launch of the payment system has now been narrowed to mid-2023.
“With the FedNow launch date in sight, we are pleased with the collaboration and dedication our pilot participants have brought to advance modern payments in America,” said Esther George, president and CEO of the Federal Reserve Bank of Kansas City and executive sponsor of the FedNow program.
As of now, more than 120 organizations are active participants in the FedNow Pilot Program, recently more participants like U.S. Bank, Exchange Bank, and several payment processors and solution providers, including Alacriti Payments LLC, ECS Fin Inc., Form3, and ModusBox, Inc. have joined the pilot program.
“The benefits of instant payments are increasingly important to consumers and businesses, and the ability to provide this service will be critical for financial institutions to remain competitive,” said Ken Montgomery, FedNow Service program executive, in the central bank’s press release.
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FedNow Will Not Use XRP
Despite the rumors going around in the crypto community, the new US Fed payment system will not use XRP as it has nothing to do with cross-border payments.
“This 2023 FedNow launch has nothing to do with cross-border flows,” said Crypto Eri in a tweet, one of the XRP content creators.
Also Moon Lamba, a famous XRP influencer, writes that;
“Many XRP influencers are misleading the XRP community. Not sure if it’s intentional. In order to believe that XRP is (or might be) used within the FedNow system, you have to have a fundamental misunderstanding of how XRP functions as a bridge currency and a liquidity tool.
Ripple is a money transfer network that satisfies the need of the financial services industry, its focus lies on cross-border settlement, which utilize its On-Demand Liquidity (ODL) to use XRP as a bridge between two currencies.