‘The Covid-19 pandemic has shined a light on the less efficient areas of our current payment system,’ says Jerome Powell, seen testifying before Congress in 2020.
Photo: pool/Reuters
WASHINGTON—The coronavirus pandemic has underscored the need to improve systems for transferring money across international borders, Federal Reserve Chairman Jerome Powell said Thursday.
“The Covid-19 pandemic has shined a light on the less efficient areas of our current payment system and accelerated the desire for improvement and digitalization,” Mr. Powell said in remarks prepared for delivery at a conference held by the Bank for International Settlements, a consortium of central banks.
Mr. Powell didn’t comment on monetary policy or the outlook for the economy, a day after the central bank reaffirmed plans to maintain its bank’s easy-money policies until the recovery advances further.
He said Thursday that the existing system for cross-border payments is safe and reliable. But he added that it suffers from outdated technology in some areas and inefficiencies that can make it difficult to comply with requirements to fight money laundering and terrorist financing.
The Fed is working to develop a faster system, dubbed FedNow, to allow banks to exchange money instantly, around the clock. Its current system operates only during business hours and often takes days to clear checks.
Mr. Powell said FedNow should be up and running “sometime in late 2023 or 2024.”
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