The U.S. Federal Reserve has declared that its Fednow payment system will be operational in July, with participants in the Fednow Pilot Program being certified in April. Ken Montgomery, the Fednow program executive, is encouraging American financial institutions to begin preparations to use the central bank’s new service. Economist Richard Werner, however, is suspicious of the timing of the Fednow rollout and believes “maybe it’s all about rolling out” a central bank digital currency (CBDC).
Fednow Payment Process Set to Facilitate Instant Payments, Economist Proposes Launch Could Lead to a CBDC
The Federal Reserve is ready to activate its Fednow payment system, and the Fed’s blog post regarding the subject reveals that a variety of interested candidates have already submitted applications. The Fed notes that entities planning to leverage the Fednow program in July include a “diverse mix” of financial institutions of all sizes, the largest processors, and the U.S. Treasury. According to Fednow program executive sponsor Tom Barkin, the president of the Federal Reserve Bank of Richmond, the launch is a “significant milestone” for “instant payments.”
The Fednow system is purportedly able to provide payments and settlements immediately, “regardless of size or geographic location — around the clock, every day of the year.” With access to funds promptly, participants can manage their money in a more flexible manner, according to the Fednow description. Access to the Fednow system will be granted through the Fedline Network, which presently serves approximately 10,000 financial institutions and agents. “The Fednow Service will launch with a robust set of core clearing and settlement functionality and value-added features,” the Federal Reserve’s announcement explains.
Though, not everyone is pleased with the central bank’s plans to enhance payments, as Florida governor Ron DeSantis recently revealed legislation that blocks a CBDC in the state of Florida. Speaking about the Fednow program, economist Richard Werner divulged to Michelle Makori, the lead anchor and editor-in-chief at Kitco News, that the timing is “suspicious.” The Fednow rollout could pave the way towards surveillance capitalism and introduce a CBDC.
“The timing is suspicious,” Werner said to Makori during his interview. “Why do they roll this out now? The banking system has done its job well, in terms of making transfers of funds and payments, so why do we suddenly need to change it?”
Werner Believes the Government Wants to Eliminate Alternatives
Werner believes that central banks will monopolize the banking industry and enforce “totalitarian control.” He pointed out that “we can’t really trust” central banks, and the primary goal is to remove alternatives. Coincidentally, U.S. President Joe Biden’s recent economic report downplays crypto assets like bitcoin (BTC) and highlights that once the Fednow program is ready, there is no need for alternatives. The White House claims that crypto assets fail to achieve the core aspects of sound money in contrast to fiat currencies like the U.S. 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 it when the programmability can be used, where it can be totally fine-tuned down to the person, and in real-time influence our behavior by restricting us from doing certain things … you’ll need the permission of the central planners.”
When a CBDC does eventually launch, Werner suspects that alternatives and cash will be eliminated gradually, and because CBDCs are programmable, control over one’s finances will not be difficult to achieve. Sure, you will be able to use the monetary ledger system, but in the end, the government’s “totalitarian control system” holds the funds.
“Once you put your money in the central bank, and the central bank issues your CBDC, legally they own the money,” Werner concluded. “You have a claim, but sadly 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 like China, Nigeria, and Venezuela have implemented such systems.
What are your thoughts on the Fednow payment service and its potential impact on the financial industry? What do you think about Werner’s opinions? Share your thoughts about this subject in the comments section below.
