US central bank has rolled out its own instant money transfer service for banks
In a recent social media post, the U.S. Federal Reserve announced the launch of its own service for instant money transfers that can be used by banks and credit unions, called FedNow.
The tweet states that it will allow banks to send funds on the request of their clients "instantly, any time of the day, on any day of the year."
Federal Reserve launches its crypto rival project
According to the Fed's press release, this payment infrastructure includes 35 financial institutions, U.S. Department of the Treasury's Bureau of the Fiscal Service, along with almost 20 service providers.
Just launched, the #FedNow Service allows banks and credit unions to transfer money on behalf of their customers instantly, any time of the day, on any day of the year. Read more: https://t.co/jP2et4nzcl #instantpayments #paymentsindustry #FederalReserve #financialservices pic.twitter.com/Rl2TfrxeVQ— Federal Reserve Financial Services (@FRBservices) July 20, 2023
The new money transfer service will be operating across the entire United States, providing instant payments as demand from customers keeps growing.
Currently, the Fed is negotiating with more than 9,000 U.S. banks, trying to persuade them to join the FedNow network to expand it and provide more benefits to U.S. retail and corporate customers.
The Federal Reserve, along with the whole banking system and the SEC, is opposed to cryptocurrencies, claiming that they are only used for money laundering and other criminal activities. Although at least Ripple is targeted at working with banks and other traditional financial institutions, back then, the company was deeply engaged in the lawsuit initiated by the SEC against it.
Now, the Fed has decided to create its own payments system that will be able to keep customers out of crypto, and which would operate within the traditional financial system based on fiat currencies but would be faster than such remittance giants as Western Union and MoneyGram.
Aside from that, the Fed has been looking into the creation of the digital U.S. dollar, the so-called FedCoin, a CBDC.
Here's indirect connection between FedNow and Ripple
The first mentions of FedNow were made back in early 2021, when Ripple's customer Volante Technologies began collaborating with the Fed to develop this service for instant payments.
FedNow is part of the ISO 20022-based network, which is also used by Ripple Labs. It is not the only Ripple customer chosen by the Fed to help it create the payments system. ACI Worldwide has been working on it too, since January 2021.