Welcome to Innovating Payments Top 3 News Headlines for the Week of Aug. 21, 2022. Federal Reserve Governor Michelle Bowman said that FedNow(SM) will be available by mid-2023. She added that FedNow may fulfill some of the benefits derived from a central bank digital currency. Also in the news, the Federal Reserve Board released additional information for banking organizations engaging or seeking to engage in crypto-asset-related activities, calling out the benefits and risks. Finally, the Fed has determined standards by which it will now review applications from certain fintechs with a bank charter for a master account at the Fed and access to the Fed's payment rails.
Read on to learn more.
1. FedNow to Launch by Mid-2023, Fed Official Says (Payments Dive)
While the Federal Reserve has sometimes been coy on divulging the exact timing for its launch of the new real-time payments system FedNow next year, Federal Reserve Governor Michelle Bowman said this week that the new system will be available by mid-2023. In her speech at the VenCent Fintech Conference in Little Rock, Arkansas on Wednesday, Bowman also said FedNow may fulfill some of the benefits that have been suggested could be derived from another potential payments innovation, namely a central bank digital currency. Read more.
2. Federal Reserve Board Provides Additional Information for Banking Organizations Engaging or Seeking to Engage in Crypto-Asset-Related Activities (The Federal Reserve Board)
The Federal Reserve Board on Tuesday provided additional information for banking organizations engaging or seeking to engage in crypto-asset-related activities. The emerging crypto-asset sector presents potential opportunities to banking organizations, their customers, and the overall financial system; however, crypto-asset-related activities may also pose risks related to safety and soundness, consumer protection, and financial stability. Read more.
3. Fed Accounts Are Now Open to Fintechs With a Bank Charter Under New Guidelines
For years, payments fintechs with a bank charter have labored under a requirement that, for money movement, deposit-taking, and other related services, they largely had to work with another federally chartered bank. This week, the nation's top banking regulator announced an important change to its rules that could sweep away that crucial requirement for a rapidly growing list of these firms. The Federal Reserve said on Monday it has determined standards by which it will now review applications from certain fintechs with a bank charter for an account with the Fed, known as a master account, that would grant fintechs direct access to services such as the Fed's payments rails. Read more.
How does your financial institution plan to engage with the new FedNow Service in 2023? What is your organization's level of interest in engaging in cryptocurrency? Do you think certain fintechs should have direct access to the Fed's master account and payment rails? Why or why not?
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.
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.