Separating FedNow Facts and Fiction


While the financial world awaits the summer rollout of the FedNow instant payment service, two political figures—coming from well left and well right of center—this week conflated FedNow with their own bogeymen, fundamentally miscasting what the service is and what it will do.

Whether a true lack of understanding or a willful disfiguring of the facts, the remarks of Robert F. Kennedy Jr. and U.S. Rep. Marjorie Taylor Greene demonstrate the challenge faced by any advancement in financial services or products to rise above the din and clearly communicate what it is (or, in rebutting Kennedy and Greene, what it is not).

What They Said

Kennedy’s tweet claimed that the Fed would “introduce its ‘FedNow’ Central Bank Digital Currency (CBDC) in July. CBDCs grease the slippery slope to financial slavery and political tyranny.” Predictably, that tweet—which wandered into other areas of unrelated grievance—gave rise to replies and retweets that incorporated Kennedy’s position into their own.

Greene posted a news story from CNBC about the planned July launch of FedNow and wrote: “We should go back to the gold standard, not digital currency payment systems. Hard pass.”

Both got it fundamentally wrong.

What FedNow Is

FedNow, like The Clearing House’s RTP before it, is a financial messaging system that initiates, routes, and settles payments in real time, enabling swifter and less expensive money movement. Participating institutions will have seven-day, 24-hour access to the system.

The Clearing House has operated its RTP system since 2017, with the participation of about 300 financial institutions. FedNow is likely to broaden the reach of instant payments nationwide.

Initially, FedNow will be confined to payments between financial institutions in the United States. Other Fed payment services come with fees, and FedNow will be no different. Banks will decide whether to pass those fees on to customers.

What FedNow Isn’t

Put simply, FedNow is not the money. It is a system by which the money moves—in real time, with immediate settlement, all the time.

It’s not a currency, digital or otherwise.

It’s not a standard for backing currency.

The field of payments isn’t well understood by people outside the sector, as the tweets by Kennedy and Greene underscore. From opposite sides of the fringe, they seem to have found a kinship on a distrust of the Fed, and certainly, there’s a legitimate debate to be had about whether it needs to insert itself this far into payments and compete with the private sector in this way.

Still, whatever one’s position on CBDCs, or bitcoin (or cryptocurrency in general), or digital payments, or anything else, we cannot move toward meaningful discussion if we cannot agree on a simple set of operational facts that underpin the debate.

Fact: FedNow is a messaging system for instant payments.

That’s it. Kennedy and Greene—and they’re not alone—are bringing needless noise to the issue at hand.


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