The Federal Reserve is taking a giant step closer to the creation of a central bank digital currency (CBDC).
Its new digital payments system, FedNow, will debut in July.
According to Richmond Fed President Tom Barkin, it will create “a leading-edge payments system that is resilient, adaptive, and accessible.”
Now, if you’re a regular reader, you probably knew this was coming.
I’ve written before about the government’s desire to move away from physical cash and towards a central bank digital currency (CBDC).
But that desire had been pretty wishy-washy up until this point.
That’s no longer the case…
So today and tomorrow, I want to pull back the curtain on this crucial development and show you what it means for your money. I’ll also discuss how you don’t have to sit on the sidelines and wait for the CBDC trend to unfold. In fact, you can start preparing yourself for what’s coming now…
The Newest Addition to the Payments Ecosystem
As a reminder, a CBDC is a currency that would not be printed. It would only exist in cyberspace, allowing consumers to transact without a bank account.
However, it also gives the Fed and government almost unbreakable financial control over your life.
For now, let’s take a step back and examine the Fed’s new payment system…
You see, the Fed wants FedNow to be recognizable as a payment method. It’ll be comparable to PayPal, Venmo, and Zelle.
As such, FedNow will allow businesses and people to send and receive instant payments 24/7, 365 days of the year.
This can be super useful in certain situations. Say a business needs a quick delivery of supplies… or someone has a bill coming up they want to pay immediately…
They’d be able to fulfill these needs through FedNow. It enables settlements between banks in real time.
Any bank eligible for Federal Reserve financial services – regardless of size – will be able to use FedNow.
Here’s what Nick Stanescu, FedNow Business Executive, noted last October:
FedNow is going to be a game-changer that is going to revolutionize payment systems in the U.S.
Now, fintech apps like PayPal, Cash App, and Venmo, already transfer money from one party to another instantly. And, as you probably know, they’ve dominated the space.
But here’s the big difference between the payment fintechs and FedNow…
These apps can instantly transfer between themselves, but not into a user’s bank account. Meanwhile, the Fed’s payments service will offer instantaneous payments to individuals’ and businesses’ bank accounts.
And it will enable different kinds of transaction types, from an individual paying a merchant, businesses paying businesses, and beyond.
Now, the Fed is doing this all in the name of leveling the playing field in the payments ecosystem. It wants to give smaller banks and credit unions a fighting chance in the payments arena.
Yet, the Fed has a much bigger plan in mind…
FedNow Is a Precursor to a CBDC
FedNow may not be a CBDC, but it’s a precursor to one.
Here’s what Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive, said in the Fed’s announcement:
Availability of the service is just the beginning, and growing the network of participating financial institutions will be key to increasing the availability of instant payments for consumers and businesses across the country.
So, by the Fed’s own admission, this is just the beginning…
The Fed is clever. By expanding its payments system to include more institutions, it can get people to rally behind an eventual Fedcoin.
Keep in mind that FedNow is supposed to be a win for consumers… They’ll be able to make cheap and instantaneous payments.
But there’s more to the story…
The Benefits Don’t Outweigh the Dangers
FedNow brings us closer to the rollout of the digital dollar.
And as I’ve said before, a digital dollar could offer some benefits…
It might come in handy if you need to receive a stimulus check… or apply for a government emergency loan for your business.
A CBDC could even support new business models and provide a foundation to jumpstart innovations in the financial sector.
But the benefits do not outweigh the potential dangers.
With a digital dollar, the government could have complete knowledge of – and control over – every transaction you make.
Tomorrow, I’ll dive into how a CBDC erodes your privacy and takes away your anonymity. I’ll explain the potential consequences of government overreach in our daily lives and how that can manifest for the average person.
Lastly, I’ll show you one way you can prepare and protect yourself against this inevitable trend.
Stay tuned for more.
Regards,
Nomi Prins
Editor, Inside Wall Street with Nomi Prins
P.S. A small group of powerful people are colluding to virtually “ban” cash – leading to the end of the dollar as we know it. It’s a plan that the Federal Reserve, the White House, and the financial elite are set to enact with the launch of the digital dollar.
But I’ve found one asset that can help you become your own banker – and escape the clutches of this power grab. To learn more, watch a new video presentation I put together right here.