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TikTok posts
stated on April 6, 2023 in a TikTok video:
“In America our own (central bank digital currency) system is going to be launching July 1. It’s called the FedNow payment system.”
true false
By Jeff Cercone April 14, 2023

Don’t confuse FedNow payment system and central bank digital currency; they’re not the same

If Your Time is short

  • A central bank digital currency system is not launching in July. The Federal Reserve System is studying the benefits and drawbacks of such a system but has not proposed implementing it. It would require congressional action to be implemented.

  • The FedNow Service is a separate initiative from the Federal Reserve System that is an instant payment infrastructure. It is set to launch in July.

In recent months, social media has been rife with baseless fears that the U.S. government is seeking to replace paper money with a central bank digital currency to control its citizens.

A new claim shared on TikTok put a name and timetable to the plan’s supposed implementation.  But it falsely conflates a potential central bank digital currency that is only under consideration and has no timetable for implementation with a Federal Reserve System instant payment system that has an upcoming launch date.

"In America our own (central bank digital currency) system is going to be launching July 1. It’s called the FedNow payment system," said the speaker in a video posted April 6 on TikTok.

The speaker also says its purpose is for the government to track how Americans spend their money.

TikTok identified this video as part of its efforts to counter inauthentic, misleading or false content. (Read more about PolitiFact's partnership with TikTok.) 

We’ve debunked such claims before, which have been widespread among conservatives, even government leaders like Florida Gov. Ron DeSantis.

A central bank digital currency system is not launching in July. The Federal Reserve System is studying the benefits and drawbacks of such a system but has not proposed implementing it. 

The FedNow Service is a separate initiative from the Federal Reserve System — the country’s central bank —  and it’s not replacing paper currency. It will let  financial institutions  provide instant payment services to customers, according to the Federal Reserve.

FedNow will replace existing payment systems such as automated clearinghouse, or ACH, a nationwide network the Federal Reserve helps operate. Banks use the automated clearinghouse to send electronic credit and debit transfers for things such as payroll, tax refunds and mortgages.

FedNow will be similar to private systems like Zelle or Venmo, and its use by banks would be optional. It is expected to launch in July.

Separately, since 2017 the Federal Reserve has been studying the possibility of creating a central bank digital currency, according to news reports. It issued a report in January 2022 that laid out potential benefits and risks of such a system.

President Joe Biden in March 2022 signed an executive order directing the U.S. government to evaluate the feasibility of a potential central bank digital currency.

But there are no plans in place to implement it, and such a system may never happen. Doing so would require congressional action, Fed Chair Jerome Powell testified March 8 to the House Financial Services Committee. 

Most Americans already keep their money in mostly digital form, such as payment apps and banks, the Federal Reserve’s website said. The difference is that a central bank digital currency would be a liability of the Federal Reserve rather than commercial banks. 

The Federal Reserve said central bank digital currency, if implemented, would not replace paper currency and that protecting the privacy of consumers is critical.

Experts have told PolitiFact that current U.S. laws do not allow the kind of surveillance and control that the video claims the government would possess with a central digital bank currency system.

We rate the claim that, "In America our own (central bank digital currency) system is going to be launching July 1. It’s called the FedNow payment system," False.

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Don’t confuse FedNow payment system and central bank digital currency; they’re not the same

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