Are Banks Getting the Memo That They Need to Change?
August 5th came with some very interesting news: the Federal Reserve Board officially announced the development of a “new round-the-clock real-time payment and settlement service” to support faster and more flexible payments all year round.
Labeled as “FedNow,” the launch date is expected to be in either 2023 or 2024, but the timing of FedNow’s announcement may not have been an accident because other events are playing out in real-time.
As covered in recent weeks, cryptocurrencies (especially Bitcoin) have been addressed by some of the highest figures in finance and politics, including President Trump and Treasury Secretary Mnuchin, who claims that cryptocurrencies are a “national security issue”!
Governments are taking a greater interest in regulatory clarity around cryptocurrencies, and Facebook’s controversial Libra coin likely motivated the FED to get its plans to innovate into action, but the new FedNow service will likely disrupt financial institutions and not affect popular cryptocurrencies, such as BTC, XRP, ETH, and others.
“The Federal Reserve has established over its history a broad reach as a provider of payment and settlement services to more than 10,000 financial institutions across the country.
That reach will help the FedNow Service support a nationwide infrastructure on which the financial services industry may develop innovative faster payment services for the benefit of all Americans.” – FED Press Release
With technology moving at an accelerated rate and the younger user base of banks demanding speed and expecting results instantly, the FED has likely come to the realization that providing smoother payments in real-time and not limiting them to just working days is the only way they can compete with cryptocurrencies and other technology companies that are providing an alternative payment infrastructure outside of the traditional financial system.
This is not investment advice; please always do thorough research and only invest what you are willing to lose, especially in times of uncertainty.