FedNow

[BigK]

Is anyone following this FedNow initiative?  https://www.forbes.com/advisor/personal-finance/fednow-launching-soon/

Apparently in July the Federal Reserve Bank is launching a real-time payment system to compete directly with the current Clearing House’s RTP network that we've all been using since 2017 to process digital transaction.

 

[BigK]

What Is FedNow?

FedNow is the first government-created system for financial institutions to send and receive funds almost instantly. Ideally, FedNow would ensure you’d no longer have to wait a few business days, or bide your time over holidays or weekends, to receive your money.

This means you can make payments—your mortgage, for example—ideally within seconds. You could opt to send funds on the due date rather than having to plan several days out for an online payment to clear, or up to a week for a check to be processed.

For business owners, too, this means faster and smoother operations. They will be able to send and receive invoice payments, for instance, in real time online.

Edited April 27, 2023 by BigK

[BigK]

RFK Jr isn't the only one worried about what could come from the system:

Robert F. Kennedy Jr., who tweeted Wednesday that a Fed-issued currency would “allow the government to surveil all our private financial affairs … enforce dollar limits on our transactions restricting where you can send money … [and] freeze your assets or limit your spending to approved vendors if you fail to comply with arbitrary diktats, i.e. vaccine mandates.”

[RED333]

For some reason, anything with “FEDNOW”  as a header has the hair on the back of my neck, stand it up.

[ArmyBrat61]

16 hours ago, BigK said:

RFK Jr isn't the only one worried about what could come from the system:

Robert F. Kennedy Jr., who tweeted Wednesday that a Fed-issued currency would “allow the government to surveil all our private financial affairs … enforce dollar limits on our transactions restricting where you can send money … [and] freeze your assets or limit your spending to approved vendors if you fail to comply with arbitrary diktats, i.e. vaccine mandates.”

Controlling the buying and selling. What a Revelation........

[TGO David]

3 hours ago, ArmyBrat61 said:

Controlling the buying and selling. What a Revelation........

[Chucktshoes]

If I express my opinions on this along with solutions or suggested courses of action, I’m just gonna get accused of fedposting.

[NoBanStan]

Where do i sign up for Fedno?

[BigK]

18 minutes ago, NoBanStan said:

Where do i sign up for Fedno?

The private version has been working fine since 2017 if your bank was willing to participate. When I think of how big this IT project is, I'm terrified of all the bugs, traps, and backdoors there will be.

[GlockSpock]

I'm not entirely sure this is all it is cracked up to be. Could it be? Sure. But I'll simply state that Tick Tockers are wrong about many things.

As @BigK has suggested, this is sort of an alternative to ACH or RTP. Do I generally oppose it simply on the grounds of government competing with private enterprise? Sure. From what I've read, the existing transfer methods are not going away, at least for now.

Regarding issues with approval/disapproval of transferring funds, yes that is something to be very concerned about. Regarding privacy, I'm not sure it offers anything more or less than traditional transfer methods.  You think "someone" cannot check into seeing your accounts? Try that with the IRS and see how that goes.

It could be a step in the wrong direction. Or, it could be a massive government project that shuts down in a few years due to not being successful. The main concern I have is that it becomes popular and is cheap because it is subsidized. If all the "alternatives" go away and then it becomes the only option, that's a problem (as well as a government monopoly).

There already exists, to some extent, similar programs setup for slightly different use cases:

https://www.federalreserve.gov/paymentsystems/fedfunds_about.htm#:~:text=The Fedwire Funds Service is,the account of another participant.

https://www.frbservices.org/financial-services/ach

Here is something about ACH, which if you've ever used your banking information for direct deposit, paying a bill (routing/account numbers), or depositing a check, you've used ACH.

https://www.federalreserve.gov/paymentsystems/fedach_about.htm

In truth, the Fed already plays a pretty large part in ACH:

The Reserve Banks and Electronic Payments Network (EPN) are the two national ACH operators.

It doesn't appear that ACH plans on going anywhere anytime soon, at least by my reading of this recent article:

https://www.nacha.org/news/new-fed-report-further-proof-ach-network-thriving

Here's an interesting pamphlet to look through:

https://www.federalreserve.gov/aboutthefed/files/pf_6.pdf

Wondering if @MacGyver will chime in, he probably has some good insight into this.

Edited April 28, 2023 by GlockSpock

[bersaguy]

I have been talking about this for a couple months and no one has replied till now. Biden signed a bill back last Summer that had this program hid on page 84 of a bill over 1000 pages long. It gives the government total control of your money in all your bank accounts and if you try and purchase anything they don't like they can lock up all your bank accounts including any 401k and IRA accounts. It virtually does away with cash or the dollar and everything is digital from what I have read.

[GlockSpock]

4 minutes ago, bersaguy said:

I have been talking about this for a couple months and no one has replied till now. Biden signed a bill back last Summer that had this program hid on page 84 of a bill over 1000 pages long. It gives the government total control of your money in all your bank accounts and if you try and purchase anything they don't like they can lock up all your bank accounts including any 401k and IRA accounts. It virtually does away with cash or the dollar and everything is digital from what I have read.

Something that important needs a source. A legitimate one. 

[bersaguy]

10 minutes ago, GlockSpock said:

Something that important needs a source. A legitimate one. 

Who do you consider a legitimate source?

[GlockSpock]

3 minutes ago, bersaguy said:

Who do you consider a legitimate source?

Well if it is a bill or executive order, I’d say you could probably link straight to it. 

[bersaguy]

Is this what your referring to Spock?

https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/09/fact-sheet-president-biden-to-sign-executive-order-on-ensuring-responsible-innovation-in-digital-assets/

[GlockSpock]

39 minutes ago, bersaguy said:

Is this what your referring to Spock?

https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/09/fact-sheet-president-biden-to-sign-executive-order-on-ensuring-responsible-innovation-in-digital-assets/

A step in the right direction, if that's what you are referring to. That's a press release that was released before Biden signed that Executive Order. Look, I'm not singling you out at all, but there are enough real things to worry about that I like reducing the "fake" things that people make up to worry about.

With social media setup the way it is, there are people that make their entire living off of it. Some of these people use fear to make their money. Some of the fear is based on valid things, others don't care if the fear they are selling is truthful or not. @bersaguy, just to make the point stronger I'm 100% sure that I could help you setup a podcast where all you would do is go on there and talk about the things you've heard about. Wouldn't have to fact check anything, none of it would even have to be true. But if we did several episodes a week and promoted it on the internet, I bet you'd get a following larger than you might expect. Might could even make some money off it.

I'll help you out a bit because I know the internet isn't everyone's strong-suit. This page shows the Executive Orders signed by Biden in 2022.

https://www.federalregister.gov/presidential-documents/executive-orders/joe-biden/2022

Here we find the Executive Order you were talking about, I believe.

https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets

Here it is in PDF format, it's 10 pages long:

https://www.govinfo.gov/content/pkg/FR-2022-03-14/pdf/2022-05471.pdf

So...if you want to know what it's about...read it.

[Garufa]

What is the problem here?   The government already has absolute authority to seize assets, monitor financial activity, or whatever else they please regarding every single person who uses a bank or any other kind of financial institution.  If not by outright authority, then by regulation and warrants.

So what if the Fed spins up their own instant transfer system?

[leroy]

I'ma thinkin this one has some Fourth Amendment problems... 

leroy...

[Garufa]

13 minutes ago, leroy said:

I'ma thinkin this one has some Fourth Amendment problems... 

leroy...

That boat sailed a couple of hundred years ago along with everything else.  

They started working around the Constitution after it was adopted.

[MacGyver]

9 hours ago, GlockSpock said:

Wondering if @MacGyver will chime in, he probably has some good insight into this.

I can speak to this in detail.  I’ll do it in general terms here just to make it understandable - but if anyone wants more detail we can do that too.

Bottom Line Up Front: The regular outrage brokers are getting people all spooled up about something they have no need to worry about.

So here’s the deal.  The payment rails on which our modern $23T economy rides on are really antiquated - much like a lot of the rest of our infrastructure.

When you think about a bank - we kind of think of them in “old west” type terms.  I’ve got some actual money - and it’s sitting in a vault somewhere - and when I need it, I’ll go see the teller and they’ll give it to me.

Thats a fine representation of a bank up until around the middle part of the last century.  You can still think about a bank that way - except now it’s all digital “marks” in a ledger that denotes how much money you have.  And, when you make a big purchase or pay your mortgage or whatever, the computers banks have in their back office make all the appropriate entries - and for the most part we’re good.

* Let’s take out some of the lending/financial engineering that modern banks do that’s *very much* not like the banks of old and we’ve seen go *very bad* recently with the likes of SVB and FRB. *

The infrastructure problem comes into focus because even though you the consumer expect your bank transfers to be instantaneous (and most of the big banks kind of play along to make it look like they are) - from a back office perspective those transfers are *not* instantaneous.

The current primary rails that these back office payments ride on is the ACH system that went into service in 1970ish.  It literally turns off every weekday at 5:00.  It’s closed on the weekend. The ACH system is built more for those “old west” type banks than it is a modern banking system. It’s no way to run an economy.

As middle and upper class, Americans, most of your banks extend you the courtesy of not really having to deal with any of this very much. Maybe you see it when you go buy a car. You might see it when you make a car payment or a mortgage payment and you have to get it in before 3 o’clock or it doesn’t post until the next day. You see it when you close on a mortgage because those funds have to be cleared before you can go to closing and ACH causes a delay there. But, for most of us it’s not really a big deal at all in our daily lives.

But, by enabling real time payments - this system will markedly, improve the banking experience of a lot of lower income users. For those users, they are banks are typically not extending them the courtesy that they extend all of us. When you work paycheck to paycheck and have to wait 4 days for your check to clear - that’s a big deal.

I could go into the limiting factor that our old banking infrastructure actually puts on economic growth - because that’s very much a thing - but this post is too long as is.

But, no one here needs to worry about this. Seriously, you don’t need to spend any more brain cycles on it.

If you’re worried about whoever being able to seize your money - that ship sailed a long time ago.  But that’s another post for another time. 

[Omega]

So, is this what we are looking forward to?

https://www.cbc.ca/news/politics/emergencies-act-banks-ottawa-protests-1.6353968

Quote

Using powers granted under the Emergencies Act, the federal government has directed banks and other financial institutions to stop doing business with people associated with the anti-vaccine mandate convoy occupying the nation's capital.

According to the regulations published late Tuesday, financial institutions are required to monitor and halt all transactions that funnel money to demonstrators — a measure designed to cut off funding to a well-financed protest that has taken over large swaths of Ottawa's downtown core.

So, the Feds, who already see many of us as domestic terrorists, can then decide what we can support??

[MacGyver]

52 minutes ago, Omega said:

So, is this what we are looking forward to?

https://www.cbc.ca/news/politics/emergencies-act-banks-ottawa-protests-1.6353968

So, the Feds, who already see many of us as domestic terrorists, can then decide what we can support??

This is from the CBC - so maybe if you move to Canada, I guess?

The Federal Reserve is concerned (by law) with liquidity amongst financial institutions.  They don’t have visibility into individual customers - and don’t care.

Now, banks have to comply with OFAC (the Office of Foreign Assets Control) as instituted by the Treasury.  That’s very much concerned with terrorists.  But the key word in OFAC is *foreign*.  As a citizen it doesn’t apply to you. 

[GlockSpock]

13 minutes ago, MacGyver said:

Maybe if you move to Canada, I guess?

The Federal Reserve is concerned (by law) with liquidity amongst financial institutions.  They don’t have visibility into individual customers - and don’t care.

Now, banks have to comply with OFAC (the Office of Foreign Assets Control) as instituted by the Treasury.  That’s very much concerned with terrorists.  But the key word in OFAC is *foreign*.  As a citizen it doesn’t apply to you. 

Think of it like...the bank for banks!

[No_0ne]

1 hour ago, MacGyver said:

I can speak to this in detail.  I’ll do it in general terms here just to make it understandable - but if anyone wants more detail we can do that too.

Bottom Line Up Front: The regular outrage brokers are getting people all spooled up about something they have no need to worry about.

So here’s the deal.  The payment rails on which our modern $23T economy rides on are really antiquated - much like a lot of the rest of our infrastructure.

When you think about a bank - we kind of think of them in “old west” type terms.  I’ve got some actual money - and it’s sitting in a vault somewhere - and when I need it, I’ll go see the teller and they’ll give it to me.

Thats a fine representation of a bank up until around the middle part of the last century.  You can still think about a bank that way - except now it’s all digital “marks” in a ledger that denotes how much money you have.  And, when you make a big purchase or pay your mortgage or whatever, the computers banks have in their back office make all the appropriate entries - and for the most part we’re good.

* Let’s take out some of the lending/financial engineering that modern banks do that’s *very much* not like the banks of old and we’ve seen go *very bad* recently with the likes of SVB and FRB. *

The infrastructure problem comes into focus because even though you the consumer expect your bank transfers to be instantaneous (and most of the big banks kind of play along to make it look like they are) - from a back office perspective those transfers are *not* instantaneous.

The current primary rails that these back office payments ride on is the ACH system that went into service in 1970ish.  It literally turns off every weekday at 5:00.  It’s closed on the weekend. The ACH system is built more for those “old west” type banks than it is a modern banking system. It’s no way to run an economy.

As middle and upper class, Americans, most of your banks extend you the courtesy of not really having to deal with any of this very much. Maybe you see it when you go buy a car. You might see it when you make a car payment or a mortgage payment and you have to get it in before 3 o’clock or it doesn’t post until the next day. You see it when you close on a mortgage because those funds have to be cleared before you can go to closing and ACH causes a delay there. But, for most of us it’s not really a big deal at all in our daily lives.

But, by enabling real time payments - this system will markedly, improve the banking experience of a lot of lower income users. For those users, they are banks are typically not extending them the courtesy that they extend all of us. When you work paycheck to paycheck and have to wait 4 days for your check to clear - that’s a big deal.

I could go into the limiting factor that our old banking infrastructure actually puts on economic growth - because that’s very much a thing - but this post is too long as is.

But, no one here needs to worry about this. Seriously, you don’t need to spend any more brain cycles on it.

If you’re worried about whoever being able to seize your money - that ship sailed a long time ago.  But that’s another post for another time. 

This^.  Virtually all transactions not involving direct transfer of currency from person to person already uses similar (albeit as MacGyver already pointed out, antiquated) mechanisms.  It's inevitable that these are updated and modernized to reflect the needs of today's economy, unless you're willing to devolve into some sort of barter system ...

[MacGyver]

If this is something that does worry you - I might encourage you to model out what you think actually happens behind the scenes when you use your check card - or write a check - or pay a bill online. If an out of control government wanted to take all your money or whatever - they don’t need this system to that.