GENEVA, Switzerland – Social media giant Facebook’s Libra might be overshadowed by FedNow, as Federal Reserve announced its plans.
The digital payment world has never been the same since Facebook announced its newest Libra, which is expected to be launched in 2020. Only a few weeks after the statement from the social media giant, China also announced that they were in the works for building renminbi’s digital version. Soon after, the plan for Project Venus, a platform aiming to build localized stablecoins that are based on blockchain, was also unleashed by Binance. Now, Federal Reserve is joining in the buzz as they announced their plan for FedNow, a payment and settlement service in real-time.
The payment platform was kept private for months, but with the announcement, it seems like the service could finally be disclosed to the public.
A commissioner with the FTC (Federal Trade Commission), Rohit Chopra, sent a letter to the Federal Reserve. It specifically detailed the need for a payment service like FedNow, especially with the warning that the launch of Libra is trying to pose.
Chopra included in the letter the need to build a public competitor that could potentially confront Libra. He also stated three points why it’s necessary to accelerate the new FedNow project: to check the possible abuse in the private sector, to keep the monopoly of private capital market payment from rising, and the benefits the public can get with Federal Reserve acting as the arbiter for payments.
Chopra also spelled in the letter the concern about the new-age tech rebels in Silicon Valley or the traditional finance giants on Wall Street would seize the global payments market. He said that it is imperative for the Board to implement the new service in a timely manner as large private firms like those on Silicon Valley and Wall Street are looking to increase their market power.
Chopra continued by saying that the future of faster payments will be uncertain as the two of America’s competing forces start to dominate the market if there is no public competitor in place. He also said that the lagging efforts of the private sectors to quicken the scale and speed of fun transfers caused countless bypass attempts in the banking system. Ultimately, it caused private companies like Facebook to try their hand in the market.
Regardless of what Libra is going to bring, the intervention by the service from the Federal Reserve is what’s needed by the financial system, Chopra advised.