Is the Federal Reserve's FedNow service now the primary form of currency in the United States? No, that's not true: FedNow is just an instant payment system and will not change the currency infrastructure in the United States. Rather, the service will make it easier to transfer money between entities and financial institutions.
The claim appeared in a video (archived here) published on YouTube on April 2, 2023, by the YouTube channel Morris Invest. The video was titled "In less than 24 Hours the US dollar changes FOREVER | Morris Invest." The narrator of the video opened:
You'll be able to tell your kids about how the U.S. dollar was once the strongest currency in the world, and you were there to watch it fall into ruin. You'll be able to explain to your kids that it was all self-inflicted, how arrogance, greed and bullying led to the collapse. We'll get to that part of the story in a minute, but first, 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 U.S. 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 U.S. 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.
This is how the video looked on YouTube at the time of writing:
The "About the FedNow Service" page on the website for the FedNow service opens:
The FedNow Service is a new instant payment infrastructure developed by the Federal Reserve that allows financial institutions of every size across the U.S. to provide safe and efficient instant payment services.
Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments in real time, around the clock, every day of the year. Financial institutions and their service providers can use the service to provide innovative instant payment services to customers, and recipients will have full access to funds immediately, allowing for greater financial flexibility when making time-sensitive payments.
There is no mention of FedNow replacing traditional currency in the United States, as it is only a payment service, not a currency. A video embedded on the "About the FedNow Service" page explaining how the service works states that the service will allow financial institutions to approach transfers in an innovative way: for example, such institutions can set up instant bill pay or account-to-account transfers.
Although the FedNow service will start "the formal certification of participants" during the first week of April 2023, the service itself does not launch until July 2023. The service was first announced in 2019.
A page on the Fed's website explains the central bank's stance on central bank digital currency (CBDC). The page, which was last updated on November 4, 2022, explicitly states that the only currency available to the public from the Fed are physical banknotes. Although the Fed has explored the use of CBDC through research, that currency has not been implemented at the time of writing.
Brazil's central banking system launched an instant payment service, Pix, in 2020. On March 23, 2023, Reuters reported on tests run by central banks in Singapore, Italy and Malaysia of a unified instant payment system. The hope is that the continuation and success of such tests could lead to the development of a global instant payment network.
Lead Stories has debunked several false claims related to the Fed. Those can be found here.