The US Federal Reserve System has revealed that first vice president Kenneth C. Montgomery will head the development of the banks FedNowSM service.
FedNowSM will be the Federal Reserve’s first endeavour into supporting real-time payments in the US with interbank real-time gross settlement (RTGS) and integrated clearing.
“This is an exciting milestone in U.S. payments modernization, as the Federal Reserve works toward fulfilling the payments industry’s request for a service that will support safe and efficient faster payments for all financial institutions – and by extension, provide the benefits of real-time payments to all Americans,” commented Montgomery.
“The FedNow team is gathering industry input on desired features and functionality so we can solidify FedNow’s product design and further define the pathway to launch.”
The development of FedNow is a multi-year effort, aimed at a 2023/2024 launch date, with transaction values initially limited to $25,000.
Once in place, FedNow is expected to provide a “critical infrastructure” to enable financial institutions of all sizes to offer real-time payments services to their retail and commercial customers.
“Ken brings deep financial services insights and technical expertise to his new role,” noted Esther George, president and chief executive officer, Federal Reserve Bank of Kansas City, and sponsor of the Federal Reserve’s payments improvement initiative.
“He is a natural fit to lead FedNow given his success in previous Federal Reserve technology and business management roles, and his leadership of our payments security efforts.”
Montgomery will retain his current position as Federal Reserve Bank of Boston first vice president and chief operating officer.
Previously he spearheaded the National Information Technology Architecture and Standards Division as executive vice president and Federal Reserve System chief technology officer.
Former Texas congressman Ron Paul described the development of FedNow as “baffling” in a statement.
In a statement, he said: “A Federal Reserve-run real payments system will crowd out private alternatives, leaving consumers with one government-run option for real-time payments.
“This will be bad for consumers and real-time entrepreneurs but good for power-hungry Federal Reserve bureaucrats who will no doubt use FedNow to help “protect” the Federal Reserve’s fiat currency system from competition from crypto currencies.”