FedNow is a better alternative to a CBDC, says Federal Reserve Governor

Many of the challenges that Fedcoin fans say the central bank digital currency (CBDC) will solve will be solved by the upcoming payment service FedNow, a Federal Reserve governor has claimed.

At the recent VenCent Fintech conference in Little Rock, Arkansas, Michelle Bowman pitched FedNow as a better alternative to Fedcoin, reiterating a stance she’s held for years.

“FedNow will help transform the way payments are made with new services that allow consumers and businesses to make payments conveniently, in real time, any day and with immediate availability of funds for the recipients. Our assessment of these benefits has not changed even as we wonder if a central bank digital currency (CBDC) could fit into the future monetary and payments landscape in the United States,” she said. to participants.

FedNow is a new instant payment service the Fed is working on and is expected to launch early next year.

Bowman believes the new service will address issues that many Fedcoin fans have raised about its needs.

The regulator has also looked into digital assets and the proposals of some banks to offer them to their customers. On the one hand, she believes that the demand for digital asset products within the traditional financial system has been greatly exaggerated, mostly by people outside the banking industry.

“But before a bank begins to engage in or offer services related to crypto-assets, it must seriously and carefully consider the risks involved, both for the bank and for its customers. The recent turmoil in the digital asset industry only underscores this point,” she warned.

For now, the Fed is focused on issuing regulatory guidance to regulated financial institutions on digital assets, ranging from managing custody and facilitating the purchase of these assets by customers to issuance. stablecoins and the management of loans secured by digital assets.

Bowman, who has been with the Fed since 2018, is a longtime critic of the digital dollar. She has repeatedly asserted in the past that she sees no need for the CBDC.

“I’m not really sure I understand or see the business case for creating it,” she said. said Last year.

Watch: The presentation of the BSV Global Blockchain Convention, CBDC and BSV

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Rosalie M. Dehner