FedNow launches in the US – Is it a real competitor to cryptocurrencies?

Launch of FedNow in the US

FedNow has long been the US central bank’s flagship project. The service allows streamlining payments for banks, especially by making them instant. The Federal Reserve therefore presents FedNow as a true update to the capabilities of banks and credit institutions that currently rely on the SWIFT system. The latter is particularly slow: transfers can still take several days.

As the Federal Reserve’s announcement points out, it’s not an app or transfer service per se, but of a technology offered to banking institutions. They must then implement it to offer transfers of this type to their customers.

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The press release also specifies that FedNow, which is not an asset, it is not intended to replace digital currenciesespecially central bank digital currencies (MNBC).

“The FedNow service is not a form of currency, nor a step towards getting rid of any form of payment, including cash.»

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A competitor to MNBC and cryptocurrencies?

However, it is very remarkable that the central bank of the United States has bet on this service, rather than on a MNBC, at a time when almost all major economies are preparing a digital version of their reference currency. The introduction of this service is also likely to meet the growing demand for fast and flexible payment services – such as that offered by cryptocurrencies, especially dollar-based stablecoins.

However, cryptocurrencies do not play in the same field, their purpose is precisely to offer existing payment systems outside governments and regulatory institutions. If FedNow is therefore not a direct competitor to cryptocurrencies, it shows that the Federal Reserve wants to protect its dollar, which has been in trouble in recent months. The “de-dollarization” of the world is indeed underway, and the topic will be decisive for the world’s largest economy for years to come.

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Source: United States Federal Reserve