Announced for years, the FedNow solution is now launched in the United States. Will the Federal Reserve Payments Protocol be the desired panacea, and does it really play on the same playing field as cryptocurrencies?
Launch of FedNow in the United States
FedNow has long been the US central bank’s flagship project. The service allows streamline payments for banks, in particular by making them instantaneous. The Federal Reserve therefore presents FedNow as a true update of the capabilities of banks and credit institutions, which currently rely on the SWIFT system. The latter is particularly slow: transfers can still take several days.
As the Federal Reserve’s announcement points out, it’s not an app or transfer service per se, but of a technology offered to banking establishments. They must then implement it to offer transfers of this type to their customers.
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The press release also specifies that FedNow, not being an asset, it is not intended to replace digital currenciesespecially central bank digital currencies (MNBC).
“The FedNow service is not a form of currency, nor a step towards getting rid of any form of payment, including cash.»
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A competitor of MNBC and cryptocurrencies?
However, it is very notable that the Central Bank of the United States has bet on this service, rather than on an MNBC, at a time when almost all major economies are preparing a digital version of their reference currency. The establishment of this service is also likely to meet the growing demand for fast and smooth payment services – like what is offered by cryptocurrencies, in particular dollar-based stablecoins.
However, cryptocurrencies do not play in the same court, their purpose being precisely to offer existing payment systems outside governments and regulatory institutions. If FedNow is therefore not a direct competitor of cryptocurrencies, this shows that the Federal Reserve wishes to protect its dollar, which has been in difficulty in recent months. The “de-dollarization” of the world is indeed underway, and the subject will be crucial for the world’s largest economy in the years to come.
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Source : United States Federal Reserve
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