As Bitcoin and other cryptocurrency projects are already forcing banking incumbents to work more efficiently, the Federal Reserve, the central bank in the U.S., is reportedly “seriously considering” to develop a new and faster payments system for domestic use in the U.S., a recent letter from Fed Chairman Jerome Powell to senators revealed.
In the letter, which was obtained by Politico, Powell argued that the Fed is “uniquely placed” to develop a new nationwide system, given the central bank’s existing relationship with more than 10,000 commercial banks.
However, a major challenge facing the Fed’s plans is that a number of the nation’s largest banks have already invested more than USD 1 billion in developing their own improved payments system, for now known only as Clearing House Payments Co. If the Fed moves forward with its plans, it would mean that the effort already undertaken by the private banks would be wasted.
Already, several banks are fighting back against the Fed, joined by some lawmakers, including Democratic senators Elizabeth Warren and Chris Van Hollen, Politico reported.
According to Powell, however, public feedback has been “overwhelmingly favorable” to the plans of a new central bank-led nationwide payments system.
“We’ve not made a decision on this, but it’s something we’re looking at carefully, and it’s something I do expect we’ll make a decision on soon,” he said at a press conference about the Fed’s latest interest rate cut.