‘Not Related to a Digital Currency’ — US Central Bank Addresses Concerns Over Fednow Payment Network

2 years ago

The U.S. Central Bank has issued an update regarding the Federal Reserve’s Fednow project, which is scheduled to commence successful July. The Fed has responded to caller disapproval of the Fednow work and asserts that the Fednow outgo web is “neither a signifier of currency nor a measurement toward eliminating immoderate signifier of payment, including cash.”

Fednow Won’t Replace Cash, the U.S. Central Bank Insists

When the U.S. Federal Reserve announced the motorboat of the Fednow work successful July, it sparked contiguous absorption and led galore to judge it is 1 of the archetypal stages of an American cardinal slope integer currency (CBDC). Several salient economists and politicians person cautioned that a CBDC would bring astir greater surveillance of Americans’ fiscal transactions.

In bid to quell fears, the Fed issued an update connected April 7, 2023, successful which it raised the questions, “Is Fednow replacing cash?” and “Is it a cardinal slope integer currency?” The cardinal slope maintains that Fednow accomplishes neither of these objectives and emphasizes that the task is solely focused connected “instant payments.” The Fed’s update unequivocally states: “Fednow is not related to a integer currency.” The U.S. cardinal bank’s announcement adds:

Fednow is simply a payments work the Federal Reserve is making disposable for banks and recognition unions to transportation funds. It is similar different Federal Reserve outgo services, specified arsenic Fedwire and [Fed ACH]. The Fednow Service is neither a signifier of currency nor a measurement toward eliminating immoderate signifier of payment, including cash.

In a caller interview, economist Richard Werner expressed concern astir the timing of the Fednow project, describing it arsenic “suspicious.” Werner linked the inaugural to a cardinal slope integer currency (CBDC), a sentiment shared by Georgia Representative Marjorie Taylor Greene, who criticized Fednow connected April 5. In caller times, respective U.S. lawmakers person projected legislation that would prohibit CBDC initiatives.

According to the Fed’s update, the cardinal slope “has not made a determination connected whether to contented a cardinal slope integer currency (CBDC),” and it volition not bash truthful without the authorization of the enforcement subdivision and legislature members. The Fed further emphasizes that “a CBDC would not regenerate currency oregon different outgo options.”

Conversely, the White House’s caller “Economic Report of the President” noted the anticipation that Fednow and CBDC initiatives “have the imaginable to recognize galore of the benefits that crypto plus developers person promised.” With regards to a U.S. CBDC, the wide nationalist is presently alert of 2 chiseled Federal Reserve projects.

The archetypal task is an experimentation called “Project Cedar,” a aviator designed by the Federal Reserve Bank of New York. The Project Cedar protocol employs a wholesale integer dollar to heighten fiscal transactions. The 2nd CBDC inaugural by the Fed is “Project Hamilton,” a associated effort of the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT). While the Fed maintains that Fednow is not related to a integer currency, it seems to beryllium a substance of semantics.

The Fed asserts that the Fednow work is not a integer currency oregon a measurement toward eliminating immoderate signifier of payment, including cash, but instead, a integer outgo strategy designed to facilitate instant payments. However, immoderate critics contend that the strategy is, successful fact, a signifier of integer currency, and that the Fed’s characterization of the task is misleading. Ultimately, the nonstop quality of the Fednow work and its narration to a imaginable CBDC remains a taxable of debate.

Will the Fednow task pave the mode for a cardinal slope integer currency, oregon is it simply a integer outgo strategy designed to facilitate instant payments? Share your thoughts successful the comments conception below.

Jamie Redman

Jamie Redman is the News Lead astatine Bitcoin.com News and a fiscal tech writer surviving successful Florida. Redman has been an progressive subordinate of the cryptocurrency assemblage since 2011. He has a passionateness for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written much than 6,000 articles for Bitcoin.com News astir the disruptive protocols emerging today.

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