Update: CBDC & FedNow - When Are They Moving Us From Cash to a Digital Currency?

It’s been a while since I did a CBDC update on the Truth Seekers Radio Show.

I decided to do a CBDC and FedNow update and try to clarify the difference between the two.

Where Are We on the CBDC?

As of today, April 20, 2024, the U.S. Central Bank Digital Currency (CBDC) is in an exploratory, research phase. There’s no official launch or confirmed timeline for the CBDC according to reports.

The Federal Reserve is actively researching CBDCs and conducting pilot programs to assess the pros and cons. The Fed has not yet made a final decision and says that they would need approval from both the executive branch and Congress before issuing a digital currency.

According to the Federal Reserve website,
“The Federal Reserve has made no decision on issuing a central bank digital currency (CBDC) and would only proceed with the issuance of a CBDC with an authorizing law. Testifying before the House Financial Services Committee in March 2023, Chair Powell said a CBDC is, “something we would certainly need Congressional approval for.”

The Fed is getting pushback from some lawmakers that are proposing legislation against a digital currency due to privacy and government overreach purposes related to peoples’ money and finances.

According to the CBDC Tracker website, the United States is in a status of “Proof of Concept”—an elevated type of research stage. You can find out more about this status and those of countries around the world on this tracking tool. https://cbdctracker.org/

Statuses on the tracker website include:

Cancelled- Countries that cancelled or decommissioned a CBDC.
Research- Countries that have conducted first explanatory CBDC research.
Proof of Concept- Countries that are in an advanced research stage and have published a CBDC proof of concept.
Pilot- Countries that have developed a CBDC that is tested in a real environment either with a limited number of parties or on a wide scale.
Launched- Countries that officially fully launched a CBDC.

The U.S. joins countries such as Brazil, Canada, and Australia in the Proof of Concept phase. The majority of countries fall into the Proof of Concept, Research, or Pilot programs phases.

Countries that have canceled digital currencies include: Ecuador & Kenya, Finland—which was first to announce a digital currency back in 1992. It appears Finland canceled a currency called Avant; although, it looks as though they have other currencies now in “Research.”

Countries that have launched digital currencies include: Nigeria, Zimbabwe, and Bahamas to name a few.

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What Is CBDC Proof of Concept?

The status of the U.S. Federal Reserve’s CBDC is in the Proof of Concept—but what does that really mean? They are conducting experiments to test the feasibility and workings of a CBDC—sort of like a trial run to see how the CBDC would function in real-life scenarios.

The phase involves testing of various digital currency designs, putting it on systems that include centralized ledgers or distributed ledger technology, blockchain technologies.

I described these systems in-depth in a mini report I did on blockchain technology and digital currency.

They are also testing features of CBDC such as how to issue, redeem, transfer money, making payments, and how to integrate it within our existing financial systems. On top of this, they need to deal with privacy and security, and scalability issues.

They need to identify potential problems ahead of time and refine the process in order to ensure a successful CBDC launch.

What About FedNow? (And What Is It?)

FedNow is a real-time, fast payment system that was launched back in July 2023. It is NOT a digital currency. It would be classified as more of a financial payment infrastructure.

I believe there is confusion between the two because they were announced around the same time.

According to an AI inquiry, “…they serve fundamentally different purposes in the financial system.

Here’s a breakdown of the key differences:

CBDC is a digital form of central bank money, similar to cash but existing in a digital or electronic form. It can be used for storing value and making payments. (Instead of the traditional dollar)

FedNow is a real-time payment system. It facilitates the transfer of funds between bank accounts faster than traditional methods. More of an upgrade to move money faster. A system rather than the money itself.”

FedNow is a payment system (infrastructure) that could potentially use a future CBDC (digital currency).

An example of the use of FedNow would be that people could receive their paychecks and use them right away, and businesses could manage cash flow more efficiently.

“Even though FedNow is still in early stages, banks and credit unions are gradually signing up to offer this service to their customers.”

In my opinion, news reports intentionally couch them as completely unrelated projects saying that FedNow was already in development years ahead of a CBDC announcement, with the goal of modernizing existing payment infrastructures to be faster.

I believe the timing is no accident. It would make sense that you would want to build an infrastructure that is faster, more innovative, and more controllable for your new “digital currency” to run on.

If the CBDC is the currency, FedNow is the system where the currency transactions would take place. For the government to control the money, they need to control the environment in which it transacts on.

I BELIEVE they are likely related–FedNow’s technology could easily be adaptable for their future digital currency, and I think this is what was intended all along.

I am glad that it is taking longer than they bargained for as I would like to keep my privacy in terms of what I purchase and control my own money. What about you?

Sources:
CBCD Tracker: https://cbdctracker.org/

FedNow: https://www.federalreserve.gov/paymentsystems/fednow_about.htm

CBDC & FedNow: https://www.federalreserve.gov/faqs/is-fednow-replacing-cash-is-it-a-central-bank-digital-currency.htm