The Federal Reserve plans to launch the new Real-Time Payments “FedNow” this July.

The Federal Reserve is set to launch its long-awaited real-time payment system “FedNow" in July, according to a statement Wednesday.

FedNow's service aims to resolve existing delays for clearing inter-institutional financial transactions, with the first participant certification beginning next month, and the system will be 24/7 and provide immediate access to full funding.

“We urge financial institutions and their industry partners to move full steam ahead with preparations to join the FedNow Service,” said Ken Montgomery, the chief operating officer at the Federal Reserve Bank of Boston, who has been working on the new system he said will offer a “modern instant payment solution.”

However, “FedNow” has also been seen as a potential precursor to a central bank digital currency (CBDC), though the service could also undermine one of the key strengths of a digital dollar – the ability to transfer instantly.

Federal officials – including Fed Chair Jerome Powell, then-Fed Governor Lael Brainard and then-FTC Commissioner (now Consumer Financial Protection Bureau Director) Rohit Chopra has not made any decisions about the future of the US CBDC, which needs support from Congress, the Biden administration, and the public.

Jaret Seiberg, an analyst at TD Cowen, suggests that this system could be used by crypto investors as a way for them "to raise capital and cash out of trading without leaving cash or digital dollars on the trading platform."

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