Comment letters on the proposed “FedNow” digital payments system continue to be analyzed by the Federal Reserve, but the central bank governor overseeing the planned system gave no indication Wednesday when the results of that review will be publicly released.
However, Federal Reserve Gov. Lael Brainard did suggest that Congress should review how retail payments are regulated, and she said the Fed is studying the benefits (or drawbacks) of issuing its own digital currency.
Brainard expressed optimism for the future of payments during her remarks at the Symposium on the Future of Payments in Stanford, Calif. “FedNow will facilitate end-to-end faster payment services, increase competition, and ensure equitable and ubiquitous access to banks of all sizes nationwide,” Brainard said. She added that together with the new “Real Time Payments” (RTP) system established by the Clearing House, FedNow should significantly increase the speed and efficiency of the U.S. payment system.
Regarding digital currencies issued by the Fed, Brainard said it was “essential that we remain on the frontier of research and policy development” regarding a central bank digital currency (CBDC). “Like other central banks, we are conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies.”
Regarding congressional review of the retail payments system, Brainard said it could be helpful to “identify important gaps.”
“A good place to start may be contrasting the U.S. oversight framework for retail payment systems with other jurisdictions,” she said. “Many foreign central banks, for example, have explicit authority for general retail payments oversight.”