Three Critical FedNow Questions: FedWhy? FedWhen? FedBetter?
FedNow went live – or at least got out of bed – on Thursday. This is about ten years after the Board first acknowledged that faster payments would be better payments. Maybe late is better than never given the importance of instant payments, but FedNow’s anti-climactic launch raises three fundamental questions: FedWhy? FedWhen? And, FedBetter? Let me turn first to FedWhy. The U.S. central bank thinks one of its fundamental civic obligations is controlling the payment system, a conclusion reached more as a result of envy – every other big central bank gets to play with its payment system – than by the private sector’s failure to ensure safe, sound, and speedy payments. Congress knew this in 1980 and the Fed’s payment authority is thus conditional, not that you would know this by looking at the Fed’s various payment offerings and most especially FedNow.