Many of the challenges that Fedcoin fans say the central bank digital currency (CBDC) will solve will be addressed by the upcoming FedNow payment service, a Federal Reserve Governor has claimed.
During the recent VenCent Fintech Conference in Little Rock, Arkansas, Michelle Bowman touted FedNow as a better alternative to Fedcoin, reiterating a stand she has held for years.
“FedNow will help transform the way payments are made through new services that allow consumers and businesses to make payments conveniently, in real time, on any day, and with immediate availability of funds for receivers. Our assessment of these benefits has not changed even as we consider whether a central bank digital currency (CBDC) might fit into the future U.S. money and payments landscape,” she told attendees.
FedNow is a new instant payment service that the Fed is working on and is expected to launch early next year.
Bowman believes the new service will address the issues many Fedcoin fans have raised about its need.
The regulator also delved into digital assets and proposals by certain banks to offer them to their customers. For one, she believes that the demand for digital asset products within the mainstream financial system has been greatly exaggerated, primarily by people who are outside the banking industry.
“But before a bank begins to engage in or offer crypto-asset-related services, it must seriously and carefully consider the risks involved—both to the bank and its customers. The recent turmoil in the digital-asset industry only underscores that point,” she warned.
For now, the Fed focuses on issuing regulatory guidance to regulated financial institutions on digital assets, ranging from handling custody and facilitating customer purchase of these assets to stablecoin issuance and handling loans collateralized by digital assets.
Bowman, who has been at the Fed since 2018, is a long-time critic of the digital dollar. She has claimed several times in the past that she doesn’t see the need for the CBDC.
“I’m not really sure that I understand or see the business case for creating it,” she said last year.
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