FedNow and a potential US CBDC could help bring the US financial infrastructure into the digital era in a clear and simple way, without the risks or irrational exuberance brought by crypto assets, according to the 2023 Economic Report of the President.
Near instant digital payment systems like FedNow may reduce the need for circulating digital money. In this case, the benefits of circulating digital money after FedNow is launched may be minimal. Federal Reserve governor Michelle Bowman commented in August 2022 that “my expectation is that FedNow addresses the issues that some have raised about the need for a CBDC”.
Conversely, FedNow is intended to mainly focus on domestic payments and may bring limited improvements to the cross-border payment system, at least initially. In addition, FedNow is not a digital asset, which can be used in settlements or provide transaction programmability, roles that circulating digital money could play in the globally integrated financial system.