FedNow Set for Soon

Vice Chair Brainard today announced that the Fed’s instant-payment “FedNow” system will achieve its hoped-for opening in mid-2023 (see FSM Report PAYMENT20).  Although this announcement covers only an expansion of the Fed’s pilot program rather than a complete launch, Ms. Brainard cautioned that, while the system is ready thanks to early adoption by some financial institutions, it remains to be seen if enough banks, core processors, software-developers, and other entities are willing to make the investments necessary to create the ubiquitous, equitable service sought by the central bank.  However, it is unclear if slow adoption is due to preference for the U.S.’s longstanding, private real-time system, continuing challenges to inter-operability, the fact that FedNow will be a pilot even when officially launched, or if simple lag time accounts for the delay of concern to the Fed.