FedNow Must Rely on the Private Sector for Adoption

By Peter Renton

It has been almost two months since the much-anticipated launch of FedNow. But it hasn't exactly taken the world by storm.

Michael Barr, the Fed's vice chair for supervision, made it clear in?recent remarks that FedNow is payments infrastructure and it is up to the private sector to ensure its wider availability.

Aaron Klein, a senior fellow at the Brookings Institution, is not optimistic. He thinks that in the medium term, nothing much changes for payments.

With no government mandate, it is unlikely we will see the rapid adoption of new payments technologies as we have seen for Pix in Brazil and UPI in India. Both of those payment systems came with strict government mandates.

So, maybe FedNow is going to be an evolution and not a revolution. The Fed is playing the long game here and seeing how the ecosystem around instant payments develops.

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