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Moody’s report spotlights FedNow downside
- The credit ratings agency Moody’s Investors Service this week spelled out potential drawbacks of the real-time payments system FedNow, which the Federal Reserve plans to launch next month, saying some payments players that “rely heavily” on card interchange fees for revenue could suffer.
- Moody’s also noted in the June 26 report that around-the-clock availability of the new digital payment rail may require some FedNow users to increase investments in technology and staff to more closely monitor money movement 24 hours a day to guard against cyberattacks.
- Given payments will move more quickly, the new system could also increase the possibility of bank runs, Moody’s said, pointing to the speed of withdrawals being a factor in the spate of bank failures earlier this year.