BLOCKCHAIN-ENABLED REAL-TIME SETTLEMENT FRAMEWORK FOR FEDNOW AND INSTANT PAYMENT NETWORKS

The rapid expansion of real-time payment networks—such as FedNow, the RTP network, and other instant
settlement infrastructures—has accelerated the pace of financial transactions but exposed structural limitations
in the underlying settlement processes. Current systems primarily rely on prefunded accounts, end-of-day
reconciliation, or deferred transfers of central bank reserves, creating liquidity fragmentation, intraday credit
exposure, and operational inefficiencies. As transaction volumes grow and financial institutions demand
continuous 24/7 settlement, these constraints inhibit scalability, resilience, and competition.
This paper proposes a Blockchain-Enabled Real-Time Settlement Framework designed to enhance the
settlement capabilities of FedNow and other instant payment ecosystems. The framework leverages a
permissioned distributed ledger to provide immutable, cryptographically verifiable, and atomic settlement
finality, while maintaining strict regulatory oversight and interoperability with existing payment rails. By
representing central bank reserves or interbank settlement obligations as on-chain, regulator-supervised digital
tokens, institutions gain the ability to settle transactions instantly with reduced prefunding requirements and
improved liquidity efficiency