The Federal Reserve has accelerated the timing of the launch of FedNow, its real-time payments service, to the summer of 2023.
According to Finextra, the Federal Reserve is targeting a production rollout of the service for between May and July.
Over 120 organisations are currently participating in a pilot program for the service, with technical testing set to begin at the start of September.
When it launches, the Federal Reserve claims FedNow will be accessible to financial institutions of any size, enabling them to provide businesses and consumers with the ability to send and receive payments efficiently and securely.
Lael Brainard – vice chair of the Federal Reserve – urged the private sector to get ready for the change in a recent speech.
Brainard said, “Just as the Federal Reserve has made a substantial commitment to our new instant payment infrastructure, we are calling on industry stakeholders to do the same. The shift to real-time payment infrastructure requires a focused effort, but the shift is inevitable.
“The time is now for all key stakeholders—financial institutions, core service providers, software companies, and application developers—to devote the resources necessary to support instant payments.
“This means upgrading back-office processes, evaluating accounting procedures to accommodate a seven-business-day week, arranging liquidity providers, deploying a new customer-facing application, and promoting instant payments for key use cases to customers.”
The Fed recently fined Maryland-based EagleBank $9.5m for violating the board’s insider lending regulation.
It claims that the bank ‘improperly extended credit to entities owned or controlled by its then-CEO and chairman Ronald D. Paul.’
The Board states that it found EagleBank had deficient internal controls over insider lending practices between 2015 and 2018. This allowed the bank to extend credit totalling nearly $100m to entities Paul owned or controlled, including certain family trusts, without making appropriate disclosures to, or obtaining required approvals from, a majority of the bank’s board of directors.
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