Federal Reserve Vice Chair Barr Says FedNow is Available to All Depository Institutions, Digital Asset Advocate Says Wrong

In a speech delivered at the Annual Fintech Conference in Philadelphia, US Federal Reserve Vice Chair for Supervision Michael S. Barr spoke about the Fed’s role in supporting innovation.

Barr noted that not that long ago, cash in trucks was the preferred method of moving funds, but today, the Fed offers instant transfers with its new FedNow service. In the works for quite some time, beginning this summer, regulated depository institutions have been able to sign up for the service and to extend the offering to their customers.

Barr stated:

“FedNow enables instant payments to be processed on any day of the year for a broad array of transactions. The FedNow Service is core payments infrastructure available to all depository institutions, including large banks, regional banks, community banks, and credit unions. It is those institutions that will determine whether real-time payments are available to everyone. We have provided the rails. Innovation by private depository institutions will determine whether these services reach a broad range of households and businesses. While current volumes on FedNow are small, I expect that participation will grow over time and be a significant addition to, and advance on, the existing payments infrastructure.”

While Barr said that FedNow is available to all depository institutions, one digital asset advocate and former investment banker, took umbrage to the claim.

Caitlin Long, well known for her support of crypto, said in an X (Tweet) that the Fed is blocking access to some depository firms, specifically her firm Custodia Bank.

The statement led one responder to dub FedNow – FedNo.

Long also reflected on Barr’s thoughts on stablecoins, or a privately issued digital dollar.

Later in the speech, Barr commented on crypto/digital assets, including Central Bank Digital Currency (CBDCs). Barr said it is important to understand the new technology and the tradeoffs they introduce.

“Our engagement with innovation is crucial so that we can continue to support a safe and efficient payments system into the future.”

Barr noted no decision has been made regarding the possibility of the Fed issuing a digital dollar.

 

 



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