8/17 Fed Governor Michelle Bowman mentioned in a speech that FedNow, a real-time payment system, could address the functions provided by CBDC(central bank digital currency).
In addition, while the 8/15 FED released a more inclusive master account application framework, which will enable crypto banks with chartered banking licenses, such as Exchange Kraken, to no longer rely on third-party banks to provide fiat currency related services;
But Bowman remains conservative in his response, relying on careful assessment.
FedNow or Alternative CBDC Function FedNow, a new service expected to be launched by the Federal Reserve in mid-2023, provides 24/7, 365 days a year service, which can meet the needs of businesses and individuals to transfer funds instantly, thereby creating more economic benefits.
“FedNow enables financial institutions of all sizes in the U.S. community to provide secure and effective instant payment services. It is intended to be a flexible, neutral platform that supports all kinds of instant payments, and my hope is that FedNow addresses the need for CBDCS for some people.”
Bowman said.
The Fed has enrolled the first group of participants in the FedNow pilot Scheme since May this year, starting the initial testing phase of the pay-as-you-go service.
FedNow is expected to launch in mid-2023.
While crypto operators are looking forward to the release of a more inclusive master account application framework by the 8/15 Fed, Bowman said the approach outlined in the guidance is based on risk management and mitigation, as licensing Fed accounts and services can create significant risks.
The establishment of a framework for systematically assessing different risks is intended to ensure that these legally qualified institutions are treated equally.
For example, applications from institutions other than the Federal Deposit Insurance should be subject to a higher standard of scrutiny.
Fed Governor Michelle Bowman said in her speech that she has heard a lot of discussion about banks’ interest in offering crypto assets, but that much of that talk has come from outside the banking industry.
In any case, she thinks it is reasonable for banks to want to know more about what they can offer, based on customer needs;
She has also heard of banks reacting to the flow of deposits to non-bank crypto asset companies, and welcomes the challenge that banks must also stem the flow of deposits through their own services.
However, there is a need for banks to assess risk factors, and the Fed is currently working to clarify regulatory norms on the following points:
Asset custody business encryption the recommended behavior of assets to encrypt assets for mortgage loan bank institutions issuing and distribution of a stable currency “as we know, to participate in the field of everyone looking for regulatory clarity. As a regulator, one of the most important tool we have is the ability to articulate our regulatory expectations.
It is also the most direct way we can encourage and support responsible innovation.”
“Says Michelle Bowman.