A year on from committing to build the Fed's first major new payment system in four decades, Brainard offered an update on the "substantial strides" made so far by a team of more than 100 people.

While the launch date is still likely to be in 2023 or 2024, the Fed has decided to take a phased approach to ensure that a core set of features get to market "expeditiously" with extra pieces being added over time.

Brainard says that, in addition to the core interbank clearing and settlement functionality, FedNow will have other key features from the off, including fraud tools and a liquidity management tool. Meanwhile, the service will use the ISO 20022 message standard, in part to help with interoperability with the Clearing House's RTP network , a private sector alternative.

Other features, such as support for using email addresses and phone numbers for payments, will come later because they raise legal and security challenges.

Brainard says the Covid-19 pandemic demonstrates the value of instant payments. The Fed processed most Cares Act payments to households using direct debits, prepaid cards and cheques, which often took days.

"By contrast, the ability to disburse funds via instant payments could have helped reduce the strain for those who needed the funds quickly in order to meet financial obligations," she says.

The governor also stressed the value of the Fed in leading payment innovations, while raising doubts about other projects, notably Facebook's Libra plan, which raises "fundamental questions about legal and regulatory safeguards, financial stability, and the appropriate role of private money".

She concludes: "The promise of the FedNow Service is that it will provide a modern payment infrastructure for the future, bringing the benefits of instant payments to communities across America and improving the way households, businesses, and government agencies make payments for many years to come."