Comment by TechBro8615
3 years ago
Sure, but in most countries, those services are provided by banks, not the government. There is certainly something to be said for legislation like open banking regulations that encourages/forces banks to facilitate instant peer to peer payments. But that's a far cry from a service offered directly from the government (okay, technically the fed isn't the government, but it may as well be).
Interbank payment systems are actually provided by central banks or the government (or affiliated organizations of either) in quite a few cases.
Europe has TIPS (an ECB-operated implementation of the SEPA Instant Credit Transfer scheme), India has UPI (which is pretty close to the central bank, as far as I understand) etc.
In the case of FedNow and TIPS, there are private alternatives as well, such as RTP in the US or EBA Clearing's SEPA Instant implementation in Europe. This is similar to ACH – there's both a public (FedACH) and a private (The Clearing House) implementation/network available.
> in most countries, those services are provided by banks, not the government
That's something I always point out when telling others how awesome the Brazilian Pix system
https://en.wikipedia.org/wiki/Pix_(payment_system)
is. It's not a private initiative by a bunch of individual banks, but rather a zero-fee payment system managed by the country's central bank: https://www.bcb.gov.br/en/financialstability/pixfaqen .
And it seriously rocks. It has been such a tremendous change to everyday life.
What happens when it becomes so good that it's the only option? There's no need for it to be profitable, so it can inevitably undercut private sector competitors. Do you want to live in a country where the central bank controls and monitors your ability to transact with other people?
Just last year, the Canadian government weaponized "debanking" in an effort to quell peaceful protests against vaccination mandates. They restricted the bank accounts of people who peacefully disagreed with government policy stances. And that was just with the status quo of deputizing private banks to enforce the sanctions against the individual citizens - imagine how much more systemized and effective it would be as a coercion measure if the bank accounts were directly managed and controlled by the government.
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This, ladies and gentlemen, illustrates the point I was trying to make.
OK.
But it doesn't seem to me like there's a huge difference between "Know Your Customer" + FDIC and Fed Now aside from removing risk to consumers that most people ignore anyhow.
There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time.
> There's a big difference between checking passports before onboarding a customer, and sending every transaction to the federal government in real time.
I guess there's technically a difference between "sending every transaction to the federal government in real-time" (FedNow) and "sending every transaction to the federal government, in batches three times per day" (the status quo).
But from a privacy standpoint, the two are functionally identical.
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Sounds like a European view.