Jerome Powell should tread cautiously with real-time payments proposal

Facebook’s proposed digital currency Libra got most of the attention during Federal Reserve Board Chairman Jerome Powell’s appearances before Congress last week, but a related topic looms even larger on the chairman’s plate. In the coming weeks, Powell will have to determine what role the Fed itself might begin to take as a processor of real-time payments for the financial system.

Powell took several questions during his Humphrey-Hawkins testimony before the House Financial Services Committee and the Senate Banking Committee about a proposal the Fed announced in October 2018 to begin operating a real-time gross settlement system which would allow virtually all payments to clear almost instantaneously.