On July 20, the Federal Reserve officially launched the FedNow instant payment service, collaborating with 41 banks and 15 credit unions. Notably, the U.S. Department of the Treasury’s Bureau of the Fiscal Service is also adopting this service.
The FedNow instant payment service is described by the Federal Reserve as a tool for banks to transfer funds instantly to their customers at any time of the day and on any day of the year, whereas the current system closes on weekends.
The idea of instant payments brings clear benefits across various financial and business sectors. Therefore, the Fed announced that the new FedNow system will operate alongside its other payment services. However, it is important to note that this initiative is not related to the Central Bank Digital Currency (CBDC) efforts.
Since 2019, the Fed has taken steps to launch the FedNow service as it recognizes the growing dominance of new technologies, particularly blockchain, in the payment industry.
Immediately after the Fed announced the launch of FedNow, Bitcoin had an instant reaction, dropping below the $30,000 threshold.