Federal Reserve brings forward FedNow Service launch to 2023
The US Federal Reserve amended the industrywide launch timing for its instant payments platform, FedNow Service, to 2023. The announcement narrows the delivery timeframe by a full year, updating a previous notice in 2019 that indicated industrywide availability in 2023 or 2024. Future updates are expected to further narrow the industrywide launch timeframe.
“Over the last several months, we’ve made significant strides toward our program milestones for the FedNow Service,” said Esther George, president and CEO of the Federal Reserve Bank of Kansas City and executive sponsor of the FedNow programme. “Based on the FedNow team’s progress, we are pleased to share this updated timeline so the industry can continue to prepare for the adoption of FedNow.”
The FED is taking a phased approach to expedite bringing the FedNow Service to market. Its initial launch will include core clearing and settlement functionality and key value-added features, such as a request-for-payment capability and tools to support participants in their handling of payment inquiries, reconcilements and certain exceptions.
The Federal Reserve intends to augment and enhance features in subsequent releases to continue to meet industry needs. General availability of the FedNow Service will occur after extensive testing by more than 110 participants in the FedNow Pilot Program to ensure the service is market-ready.
“We are working hard to respond to the industry’s call for urgency and growing demand for the service, which is evident in the widespread response to our call for pilot participants,” said Kenneth C. Montgomery, Federal Reserve Bank of Boston first vice president and chief operating officer and FedNow program executive. “As part of our commitment to transparency, we will continue to provide updates and further narrow our launch window as we achieve additional program milestones.”
Partnership enables treasury bonds in Poland to be recorded on blockchain
A joint partnership of institutions has launched a blockchain-based reporting system for Poland’s treasury saving bonds transactions. Coinfirm and IBM are the technological partners of the initiative alongside PKO Bank Polski and the National Clearing House that launched the system in December 2020 - with the participation of Poland’s Ministry of Finance.
The network, built on the Hyperledger Fabric blockchain technology, guarantees the immutability of data regarding transactions on treasury savings bonds. Specially-purposed apps will enable stakeholders to generate reports based on current and past transactions data.
Blockchain solutions streamline the system of treasury bonds for critical ecosystem stakeholders such as issuers, underwriters, registrars and investors - becoming a totally immutable network - minimising redundant validations of bond transactions.
2020 was a record year for the sale of treasury savings bonds in Poland, amounting to a total of PLN28.4bn (~£5.6bn) - an increase of 64.1% from 2019. All retail bonds offered by Poland’s Ministry of Finance are organised by the issuance agent PKO Bank Polski.
PSR looks to reduce risks in the UK’s interbank payment systems
The Payment Systems Regulator (PSR) has published a consultation setting out ways to reduce risks to the successful renewal of the UK’s interbank payment systems. The UK’s New Payments Architecture (NPA) is the payment industry’s proposed way of organising the clearing and settlement of most interbank payments (payments that are made from one bank account to another) in the future, including those that currently use Bacs and Faster Payments. Pay.UK, the operator of Bacs and Faster Payments, is responsible for managing the delivery of the NPA.
The NPA represents a significant opportunity to meet growing demand for digital payments, further improve resilience and support increased competition, to benefit people and businesses across the UK. To make sure these improvements are delivered, the PSR wants to lower risks to the delivery of the NPA as well as make sure it operates in a way that benefits everyone who uses it.
The PSR says there are unacceptably high risks that the current NPA programme will not provide value for money and could stifle competition which could, in turn, delay the development of products and services that benefit people and businesses. To lower the risks to the delivery of the NPA, the regulator is seeking views on limiting the initial central infrastructure contract to only those services that are most important to its successful launch.
The PSR is also consulting on the best way to support competition and innovation when the NPA is operational, including the role of the PSR’s regulation of the NPA and the firm providing the systems and infrastructure.
Proposals include that Pay.UK acts as a single point of contact for payment firms, so that commercially sensitive information does not pass to the central infrastructure provider. The PSR is also proposing that the central infrastructure provider is operationally separate from parts of any wider business which could benefit from unfair competitive advantage in payment markets. The PSR is inviting views to inform its next steps, later in the year.
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