The Federal Reserve Bank is stepping further into the digital realm, announcing its plans to develop a new "round-the-clock real-time" payment and settlement service, with a hopeful launch date in 2023 or 2024. The move will require an infrastructure upgrade to provide instantaneous payments and settlements, rivaling that of the private sector.
The Fed is now requesting public comment on how to deliver the service after a public comment period in 2018, when the Board began kicking around the idea of a payment service. At that time, it requested public comment on potential services to support faster payments, and found over 90 percent of respondents showed interest in 24/7 payment and settlement services to parallel that of the private sector.
This announcement comes after Fed Chairman Jerome Powell sent a letter to lawmakers defending the idea of an upgraded network. That letter stated the network would support instant transactions for individuals and businesses, providing round-the-clock access in comparison to its current, older infrastructure.
A Fed network would parallel networks launched by private banks, like Citigroup and JPMorgan, and some say it could delay other institutions from providing instant payments and settlements, favoring a public network over connecting to private ones.
For its part, Federal Reserve Board Governor Lael Brainard said the move aims to widen access.
"Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community," said Brainard. "FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers."