Fed's Loretta Mester: FedNow payments network is tick, Fed cryptocurrency is not

The President of the Federal Reserve Bank of Cleveland, Loretta Mester is 100% in support of the creation of a real-time payments network. The new payments network could run side by side with the existing one with some banks choosing to stick to one or combine the two. However, questions are arising as to how small and big banks will interact within the new ecosystem.

She explained in an interview:

"What you'll end up seeing is ... some banks will be on both, and others will stick with one. But if we make make sure that the message sending is standardized, they'll be able to switch if they want to switch, so there's going to be room for both systems to be very robust systems."

Discussions regarding central banks-backed digital assets are on the rise. China is already working on its own digital currency. The United States has for a long time ignored the subject but recently talks about a digital dollar have been going around. According to Mester:

“There's no active group working towards Fed digital currency. Obviously, we are monitoring the private-sector currencies … and also other central banks around the world. Some of them are starting to move in a digital currency, at least some experimentation with it. So we're definitely talking to them so that we understand the issues.”

She added:

"If you think about the digital currency they are talking about, ... you'd need right connectivity to everyone. How would you do that? And you'd be then having a lot of information on individual transactions of everyone. And frankly, I don't see a need for that here. And I don't know whether I want to be responsible for that here. We have a good payment system that runs for our banks. They're already connected to it. And that seems to be working.”