According to the US Federal Reserve, the central bank’s Fednow payment service will begin operations in July, and participants will be certified in April to take advantage of the Fednow pilot program. Ken Montgomery, the executive of the Fednow program, urges US financial institutions to prepare to join the central bank’s new payments service. Economist Richard Werner, however, believes the timing of Fednow’s launch is “suspicious” and suggests that “maybe it’s about launching” a central bank digital currency (CBDC).
Payment service Fednow gears up to facilitate instant payments, economist suggests launch could lead to CBDC
The US central bank is preparing to launch the Fednow payment service, and the Fed explains in a recently published statement blog post that there have been many interested candidates who want to use the service. The Fed details that the entities planning to use the Fednow program in July include a “diverse mix of financial institutions of all sizes, the largest processors and the US Treasury.” According to the executive sponsor of the Fednow program, Tom Barkin, president of the Federal Reserve Bank of Richmond, the launch is a “major milestone” for “instant payments.”
Supposedly, the Fednow system can facilitate payments and settlements instantly, “regardless of size or geographic location, 24 hours a day, every day of the year.” With immediate access to funds, participants can manage their money in a more flexible way, according to Fednow’s description. Access to the Fednow system will be provided through the Fedline Network, which already serves approximately 10,000 financial institutions and agents. “The Fednow Service will launch with a robust set of core clearing and settlement functions and value-added features,” the Federal Reserve announcement explains.
Although not everyone is enthusiastic about the central bank’s plans to improve payments, as Florida Governor Ron DeSantis recently unveiled legislation blocking a CBDC in the state of Florida. Talking about the Fednow program, economist richard werner he told Michelle Makori, lead anchor and editor-in-chief of Kitco News, that the timing is “suspicious.” The launch of Fednow could pave the way to surveillance capitalism and give way to a CBDC.
“The timing is suspicious,” Werner told Makori during his interview. Why are you releasing this now? The banking system has done its job well, in terms of doing fund transfers and payments, so why do we need to suddenly change it?
Werner insists that the government wants to eliminate the alternatives
Werner suspects that central banks will monopolize the banking industry and impose “totalitarian control.” He stressed that “we really can’t trust” central banks, and the main goal is to eliminate alternatives. Coincidentally, US President Joe Biden’s recent economic report downplays crypto assets as Bitcoin (BTC) and stresses that once the Fednow program is ready, there will be no need for alternatives. The White House claims that crypto assets do not achieve the core aspects of sound money in contrast to fiat currencies like the US dollar.
“They don’t want these alternatives,” Werner insists. “So they can just take your money. This is just the beginning, because the real totalitarian aspect comes into play when you can use programmability, where you can totally adjust to the person and influence in real time our behavior by restricting us from doing certain things… you will need the permission of the central planners.
When a CBDC is finally launched, Werner suspects that alternatives and cash will be phased out, and because CBDCs are programmable, gaining control of finances won’t be difficult. Sure, he’ll be able to use the monetary accounting system, but in the end, the government’s “total control system” owns the funds.
“Once you put your money in the central bank, and the central bank issues your CBDC, they legally own the money,” Werner concluded. “You have a claim, but unfortunately this claim is subject to a number of conditions.” As of March 22, 2023, approximately 114 different countries are working on CBDC research and development, while 11 countries such as China, Nigeria, and Venezuela have implemented such systems.
What do you think about the Fednow payment service and its potential impact on the financial industry? What do you think of Werner’s views? Share his thoughts on this subject in the comments section below.
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