Welcome to Innovating Payments Top 3 News Headlines for the week of May 31, 2022. The Federal Reserve's new vice chair, Lael Brainard, told Congress that a federally issued digital dollar will not cut banks out of the banking system. In other news, the Federal Reserve Board finalized a rule that provides a comprehensive set of rules governing funds transfers over the FedNow Service and legal certainty and clarity on the rights and obligations of parties to a transfer over the FedNow Service. Also in this issue, The Clearing House announced that CHIPS, a private sector USD clearing and settlement system in the world, remains on schedule to implement the ISO 20022 message format in November 2023 as planned.
Read on to learn more.
1. CBDC Weekly: Fed Promises Digital Dollar Won't Cut Out Banks; PayPal Would Support CBDC
The Federal Reserve's new vice chair, Lael Brainard, told Congress that a federally issued digital dollar will not cut banks out of the banking system. While the Fed has been non-committal at best about the need for a digital dollar, Brainard was careful to make very clear that commercial banks will remain a vital part of the U.S. banking system even if it does issue a CBDC - something that's a bare minimum of five years off, she added. Read more.
2. Federal Reserve Board finalizes rule that governs funds transfers over the Federal Reserve Banks' FedNow Service
The Federal Reserve Board on Thursday finalized a rule that governs funds transfers over the Federal Reserve Banks' FedNow℠ Service. The final rule is substantially similar to the proposal from last year, with a few clarifications in response to comments. The FedNow Service is a new 24x7x365 interbank settlement service with clearing functionality to support instant payments in the United States and is expected to be available in 2023. Read more.
3. CHIPS ISO 20022 Migration Remains on Schedule for 2023
The Clearing House (TCH) announced that CHIPS, the largest private sector USD clearing and settlement system in the world, remains on schedule to implement the ISO 20022 message format in November 2023 as planned. TCH, the operator of CHIPS, remains committed to the ISO 20022 message format to enhance the efficiency of payments processing, to allow participants and end user customers to glean value from enriched data content and structured message formats, and to support the dollar as a global reserve and settlement currency. Read more.
How might a Central Bank Digital Currency impact your financial institution and its members or customers? What is your financial institution doing to prepare for the FedNow Service launch in 2023? What steps is your financial institution taking to implement the ISO 20022 message format?
Check back soon for our next issue, which will again highlight the industry's most pressing and need-to-know developments. Until then, visit us online at Innovating Payments.
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AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.
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