Is FedNow replacing cash? Is it a central bank digital currency?
No. FedNow is not related to a digital currency. FedNow is a payments service the Federal Reserve is making available for banks and credit unions to transfer funds. It is like other Federal Reserve payments services, such as Fedwire and FedACH. The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.
The FedNow Service is an instant payments service provided by the Federal Reserve, launching in July 2023. FedNow will be available to depository institutions, such as banks and credit unions, in the United States and will enable individuals and businesses to send instant payments through their depository institution accounts. Instant payments allow individuals and businesses to send and receive payments within seconds at any time of the day, on any day of the year, so that the receiver of a payment can use the funds almost instantly.
The Federal Reserve has made no decision on issuing a central bank digital currency (CBDC) and would not do so without clear support from Congress and the executive branch, ideally in the form of a specific authorizing law. A CBDC would not replace cash or other payment options.
