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Sunday, August 20, 2023

What’s Wrong With FedNow? Everything

Thought the Federal Reserve raising interest rates was bad? Wait until they freeze your ability to get paid.

Image Credit: iStock

Seamless money transfers? State of the art security and tracking features? A hassle-free payment service backed by the Fed? No annoying third-party systems? What’s not to love about the Federal Reserve’s new FedNow Service?

Quite a lot, actually.

Despite the aforementioned ‘conveniences’, being a part of a FedNow insured business or bank will only give the federal government more power over your personal finances. As a customer, you have little say—if any—in this program’s rollout. If your bank opts in, you do too. That means your bank information and monetary transactions will be made available to and ‘facilitated’ by the FedNow system. No if’s, and’s, or but’s about it. This could make heightened federal surveillance on citizens and businesses a very real possibility down the road.

FedNow could potentially replace private services (like PayPal and Venmo) if businesses decide to go all in on the new endeavor. Let’s hope that doesn’t happen.

FedNow allows participants to seamlessly transfer funds to one another without delay while providing government-level security and support across various payment activities. Think of it as a ‘helping hand’ by Uncle Sam for when you order off of Amazon or make an ATM withdrawal. FedNow will also be implemented for people in the private-sector who have bank accounts tied to a Federal Reserve bank.

As FedNow has been given the green light after successful trial runs with select volunteer companies, we are now seeing its early adoption with institutions like JP Morgan Chase, Wells Fargo Bank, U.S Bank, BNY Mellon, and many others—all banks that consumers trust to hold their hard-earned money. FedNow’s current soft launch has dozens of various participating commercial banks across the country running customer service testing and live transactions to ensure everything goes swimmingly.

Even though the Federal Reserve itself says the government will not have access to individual accounts and cannot “control how they choose to spend their money,” the very notion of a federally operated transfer system determining how quickly and when we get paid is a little too close to home. The Reserve promises that it won’t peek into people’s accounts; who’s to say they can’t, now that they will have access to any and all information allotted to them by participating institutions? If this is abused, no longer will people have the luxury of private transactions between consenting parties. The State will be privy to every deposit you get from work, every little Amazon purchase, and each and every sale you make on Facebook Marketplace, eBay, Target, and more.

It’s easy to see what a problem this could create down the line for anyone whose buying habits cut against the grain of Federal initiatives. For example, take the current administration’s obsession with pushing ESG standards on businesses and employers. What happens if the Fed deems you are noncompliant with their environmental, social, and corporate governance rules? What’s to stop them from freezing your ability to buy products or withdraw cash? Even worse, you could do nothing wrong and suddenly find your ability to transfer or receive money ‘hindered’ if your participating institution does something the government doesn’t like. That may sound far-fetched, but it’s really not. They’re already doing this in Canada to silence protesters. Who’s to say it can’t happen here?

Still think I’m being hyperbolic? Let’s take a look at the European Union’s very real crackdown on cash. In an attempt to quell money-laundering operations and crypto-scams, Brussels has passed new anti-money laundering (AML) laws which effectively ban European citizens from making cash payments over €7,000 and crypto-asset transfers of €1,000 and over. The EU justifies this dictate saying that it protects against black market transactions using cash as an untraceable currency. Under the guise of ‘security’ and ‘safety,’ law-abiding citizens are literally and legally prevented from using cash as they see fit. What’s next? A €5,000 cash ban? How about €1,000? At this point, it looks like the EU will ban cash outright and force people to use a state-backed monetary system—similar to the one already in place in Denmark—all for the sake of deterring potential crime. So much for personal freedom.

On top of that, it’s clear the EU has complete authority over citizens’ central bank accounts—as it has seriously debated the idea of freezing personal accounts to prevent bank runs. With the EU’s monopoly on currency, there’s nothing to prevent them from attempting it and most likely succeeding.

Thought the Federal Reserve raising interest rates was bad? Wait until they freeze your ability to get paid.

It’s clear that FedNow is just a different flavor of the EU’s central bank control scheme. Within the Trojan horse of ‘security’ and ‘ease-of-use’ lies complete government control over your finances.

It’s not all doom-and-gloom, though. Consumers can support banks and businesses that see through this ruse and commit themselves to privacy and transparent business practices. FedNow may soon influence some of America’s largest banking and business institutions, but that doesn’t mean we have to consent to this gross overreach.

Maybe it would be a good idea to switch banks, before the Fed invites itself in.

  • Connor Vasile is a first-generation American and writer who wishes to raise awareness about classical liberal ideas which empower every individual, no matter their background or experience, to live their best lives and fulfill their goals.