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The FedNow Service is an instant payment infrastructure developed by the Federal Reserve. It is set to launch in July. It will not replace paper currency.
The Federal Reserve is considering a central bank digital currency, but has not implemented one.
The Federal Reserve said that in the first week of April, it would start certifying participants ahead of the system’s July launch.
Will cash no longer be a mode of payment for your everyday transactions? One social media post warned this may be the case starting today.
A man said in an April 2 Facebook video, "You'll also be able to tell your kids that you were there when they took away paper dollars and coins in favor of a US digital currency. And you'll be correct, because in fewer than 24 hours, the United States dollar changes forever."
"Tomorrow, the first week of April, the Federal Reserve begins the rollout of their new central bank digital US dollar. That's right, it’s called the FedNow program and it's going to replace your paper currency not overnight, but it's moving in that direction," he said.
The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)
The FedNow Service is an instant payment infrastructure developed by the Federal Reserve that will let businesses and individuals send and receive instant payments "in real time, around the clock, every day of the year."
FedNow was first announced in August 2019. It is not a central bank digital currency, and it is not replacing paper currency. We rated False a similar claim in September 2022, reporting that FedNow will not require banks to turn over all physical currency.
When we contacted the Federal Reserve, the press office directed PolitiFact to publicly available resources and offered no on-the-record response.
The Federal Reserve Board website says Americans already hold money predominantly in digital form, such as in bank accounts and payment apps. But a central bank digital currency would differ in that it would be a liability of the Federal Reserve, not of a commercial bank.
Although the Federal Reserve is considering a central bank digital currency, it is doing so "as a means to expand safe payment options, not to reduce or replace them," the agency’s online FAQs say. This means cash or paper currency would coexist with a central bank digital currency.
On the same webpage, the central bank said it would seek the executive branch and congressional support — "ideally in the form of a specific authorizing law" — before issuing a central bank digital currency.
President Joe Biden signed in March 2022 an executive order that directs the U.S. government to evaluate the feasibility of a potential central bank digital currency.
The central bank’s latest press release about FedNow, posted March 15, said the service will start operating in July. During the first week of April, the Federal Reserve will start certifying participants and testing the system to prepare for the service’s launch.
The Federal Reserve said the system’s first release will support transactions such as account-to-account transfers and bill pay.
U.S. residents can still use cash to pay for goods and services. We rate the claim that the FedNow program will "replace your paper currency" False.
Facebook video, April 2, 2023
YouTube video, April 2, 2023
Federal Reserve Banks, About the FedNow Service, accessed April 3, 2023
Federal Reserve System notice, Federal Reserve Actions To Support Interbank Settlement of Faster Payments, Aug. 9, 2019
PolitiFact, No, banks are not being forced to hand over physical currency to the government, Sept. 19, 2022
Board of Governors of the Federal Reserve System, Central Bank Digital Currency FAQs, accessed April 3, 2023
Board of Governors of the Federal Reserve System, Federal Reserve announces July launch for the FedNow Service, March 15, 2023
Phone call and email with Federal Reserve press office, April 3, 2023
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