> Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
> Is this akin to government-backed Venmo, or something?
Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
> On the other hand, it's going to let the government see every transaction you make
Can you go into more detail here on what you think will change from the status quo? Existing bank transfers are obviously not secret from the government on request. While the government doesn't have direct access to run search heuristics on the whole dataset they just delegate that to the banks' internal compliance team.
If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government.
Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
*Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top.
If the federal government wants to tax things they indeed can. But I was asking about a chance from the status quo.
If you owe the US government money right now they can take it out of your bank account.
> Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government.
You can shop around for a different bank but it will still follow US law and also go above and beyond to help out the feds.
> Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
> *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
If the government could stop cash transactions entire classes of crime would be significantly more impractical (while at the same time significantly invading the privacy of all citizens).
> But I was asking about a chance from the status quo.
> If you owe the US government money right now they can take it out of your bank account.
Yes, but they can't see your transactions unless they go ask your bank. Now, they could do that, but they're not set up to do this for all transactions. FedNow changes that for all transactions within FedNow. The government wouldn't start taxing transactions until FedNow is the only game in town or all other payment systems also give them that kind of visibility.
As well, with FedNow they get real-time transaction visibility, which is very different from getting non-real-time batched transaction data from banks.
> Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
>wouldn't start taxing transactions until FedNow is the only game in town or all other payment systems also give them that kind of visibility.
....Or they can just demand banks immediately start taxing transactions per merchant codes _right now_ without FedNow. And the banks would comply. They don't need real time visibility. The bank could take money off the top and/or send the tax form required to you at the end of year and IRS just like anything else. It would just be similar to Form 8949.
It won't be any worse or better than existing federally administered systems. The government already oversees all the major existing bank-to-bank transfer systems mentioned in the press release. In the US banks charge different wire fees because they can as a competitive matter, but they all use FedWire to talk to each other. Just like they can impose arbitrary limits on ACH transfer size but they all use FedACH to handle the actual transfer. This one is just a faster, more secure version of the latter.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top.
The Federal Reserve isn't the government. Yes, if they want to charge a fee for this service, they could. The same is true of every existing money-moving mechanism.
> Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government
FedNow is essentially free[0]. If FedNow imposes a higher fee in the future, you can always choose to use other services (ACH, wire payments, etc.). It's a competitive market.
> Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
This power already exists. FedNow doesn't change it one way or the other.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top.
They have no authority to do this unless you're subject to a tax witholding order. The government cannot collect taxes on arbitrary transactions as they occur - it can levy taxes, and then attempt to collect them (it hopes via voluntary payment by taxpayers).
You, like so many other commenters here, seem to fail to grasp that FedNow is a replacement for ACH, the existing inter-bank exchange system that already involves the Federal Reserve to precisely the same extent that ACH already does.
> If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top
the implied alternative being they don't take it automatically and now it's your responsibility to figure it out and pay it? Or is the alternative that you would not pay it if it were not automatic, aka tax fraud?
The magnitude of the change is somewhat in the eye of the beholder. On the one hand, the government already has a lot of visibility into your finances. On the other hand, this removes some friction that currently exists for certain kinds of transactions. This matters more to some people than others. There is also concern that this might be a step towards the eventual elimination of cash.
I find it annoying that we have these endless debates in the US where it's assumed that if there's some magnitude it of course must be more than epsilon.
I would be interested in if anyone can give a example where the friction increases in such a way as a person would experience an actual difference, or how this would actually make cash easier.
Otherwise this sounds to me like the endless silly arguments against a national id card by people. (State ID cards that then go into a federal database are no more private but come with annoying downsides like ID.me)
I wrote a comment on another thread today about this wrt surveillance. Reduced friction in surveillance definitely is something to be feared, as the evidence is that if the government/police/alphabet agencies can use a power (literally, not necessarily legally), they will. The only thing holding them back in the pre-digital age was the high cost of physical surveillance and even data storage, when "files" were things you held. The difference in quantity of possible surveillance has become a difference in quality, where it's just "common sense" that the government can easily pull your movements from cell tower records, and that they'll do so regardless of whether they're allowed to (or say "terrorism!" allows them to)
Automated surveillance and automated interference. If you think YouTube's algorithms for determining copyright or Facebooks algorithms for "community standards" are bad, wait until you have your bank account locked and can't buy food.
It lowers the cost of the government performing wide surveillance of financial activity; the fear is that lowering this cost will enable more advanced forms of detection and enforcement that ultimately look and feel like harassment.
As mentioned by a few folks elsewhere in these comments, if FedNow is wildly successful and takes a meaningful portion of payments, it centralizes information about lots of peoples' financial activity in one place, across banks and across payment platforms. This potentially leads to FedNow being a one-stop OLTP shop for governments to run queries against realtime data, or even build stream processing agents that filter or take action on patterns.
Currently, it would be more difficult to build this database as it's hodgepodged together from suspicious activity reports and subpoenas. There's of course the unknowable possibility that law enforcement and security agencies have secret ways of building a comprehensive realtime dataset - but, if they do exist, their secret nature reduces the scope of situations in which they can be used.
ACH is slow and coarse, FedNow is capable of being realtime and fine-grained. Two institutions might have one giant ACH per day between them that includes a ton of smaller transactions that are all invisible to the ACH system itself.
What does the timing have to do with visibility though? What government move is quick enough for that to matter? Do you really believe that if “the government” wants to look at money flow they won’t do it until FedNow is live? Each transaction is tracked by an ID accessible by people in the system, not sure why you men by “invisible”.
Venmo doesn’t use ACH when moving from Venmo to Venmo. And is the same with FedNow. If you send money from BankA account to bankB account, that’s an ACH transaction and it’s recorded as such. Same with Fed now.
Right, these concerns are predicated on apps built natively on FedNow gaining market share to rival Venmo enough that these transactions are no longer opaque. If everybody uses it the same way they use ACH, there's no difference to the state of the world today.
The government can already see all your ACH transactions like payroll, rent, etc because the Fed Reserve literally runs ACH. This also isn't replacing credit cards or the like, so it is basically an ACH replacement.
That's on top of reporting requirements banks already have for your transactions.
The Fed only runs FedACH, which is one of two ACH networks running the same protocol. The other is The Clearing House Payments Company's Electronic Payments Network. Indeed there used to be more private network operators, but the other two eventually folded, leaving just these two remaining.
I don't see how this is much different than the current situation. The Fed already processes ACH transactions (basically all bill-pay, most transfers to/from Paypal/Venmo etc), and all wire transfers (most high dollar money transfers)
Put the flag of North Korea into the notes of a venmo transaction. You will very quickly find out the extent to which the government knows what you are doing with your money.
which once again has nothing to do with the government and everything to do with Venmo incorporated (Paypal Inc.) choosing to operate that way out of fear of the government
Current finance laws are such that if PayPal stopped having this kind of fear of the government it would likely go under. It's just a loophole to get around the 4th amendment.
Thats actually a private corporation having an excessively skittish interpretation of federal regulations.
The government would still need to go out of their way to know about that transaction. And the liability would only come after you or the organization got in trouble for something else.
> > Is this akin to government-backed Venmo, or something?
> Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
>Unless you want savings limits and expiry dates on your money.
I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well.
This is particularly relevant with debt brakes. A country with a debt brake but without a savings brake is going to run into a pretty fundamental limitation.
Savers can delay their spending decisions and this ultimately delays the ability to repay debts but since debtor's are at the mercy of lenders, we blame the debtor for the lenders tardiness.
Which, as the article says, is an inaccurate model of how modern monetary economies actually work. Bank loans create new money, they don't lend out existing deposits, and repayments destroy that money. Reserve requirements - in countries that have them - don't affect whether a loan can be made or not.
> Bank loans create new money, they don't lend out existing deposits
Do you mind clarifying? I agree banks create new money, but they do that by lending out existing deposits. A bank can’t lend out money that don’t have on their books…
It helps if you think about it in accounting terms where assets minus liabilities needs to add up to zero. When a bank makes a loan for $100 it adds $100 to the balance in your account - which is a $100 liability - and the $100 loan to its assets, balancing the books. Bank deposits aren't stores of physical cash, they're numbers in a ledger indicating what the bank owes you, and when you get a loan it means the bank owes you more money and not that it owes anybody else less money.
This Bank of England paper is by far the simplest and best explanation of the whole process, well worth a look even if just for the summary on the first page :)
Right, but I’m not tracking your previous statement that banks don’t lend out existing deposits. They do! Sometimes up to 100% of existing deposits! I suspect we’re saying the same thing though. For example, a bank might take a $100 deposit, keep $10, and loan out the additional $90. That creates $90 because they original depositor still has the $100 in their account.
They don't lend out deposits, if a bank had zero deposits it could still loan you that $100 just by adjusting your balance and adding the loan to their books. It's a subtle difference, and honestly, the BoE explainer I linked to is by far better at explaining this than I am.
Also, this doesn’t negate the money multiplier. Assuming non-zero reserve requirements, the money multiplier is still an upper bound on the amount of money that can be created.
Yes, at the point where you try to withdraw actual cash the bank will have to use any cash it has as its assets, but nowadays the majority of transactions are digital and all that needs to happen is to adjust the balances of the payee and payer accordingly (potentially this can involve the interbank settlement network but the end result is the same).
Once you stop thinking of money in terms of tokens and bank deposits as those tokens getting stored in individual buckets - or there being any buckets at all - you can think of it in terms of assets and liabilities it makes sense. Also that commercial bank money (deposits) and central bank money (cash) are different because they are liabilities to different entities - commercial banks and the FED respectively.
Or more fundamentally, modern money is just I-O-Us being moved around.
Yes, I agree with all of this. But you’re still not going to have a bank with zero capital. We don’t have infinitely leveraged banks, for good reason :)
I’m still missing how this negates the money multiplier though. If banks are subject to reserve requirements, doesn’t the money multiplier still give a reasonable upper bound for the amount of money that can be created?
> > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.
> Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
So, almost like SEPA, but not as good, as not all banks are in it? I can type anyone's IBAN* into my banking app and transfer them money pretty much instantly. However, ours will have a delay outside banking hours, which is annoying. Sounds like FedNow is always instant, which is a definite improvement.
"Normal" SEPA isn't instant either. You need SEPA Instant Payments for that and many banks don't support that yet although an EU directive is supposed to make it mandatory to at least be able to receive them, I think.
My mid-sized Italian bank has a promotion right now to make instant payments with only 1 € in fees (instead of the usual 7 they charge, or 0 for "normal" bank transfers settled overnight).
It's bad enough that banks have virtually unlimited insight into my spending habits that we need to give the Feds the same access. I should have the right to buy a big mac without some government server getting pinged.
Another concern I have heard voiced is that CBCD could be programmed - eg. you can't buy X, or you can only buy Y at certain times, or for certain prices, etc. and has the potential for reduced liberty vs. cash.
It could also be geofenced. Can't use your phone to buy fireworks from out of state because it's illegal in your state. Or you can only spend this money at a local store, but not at a store in another town.
How will they protect us though unless they know the nature of every transaction we participate in? Are you really responsible enough to take care of yourself? A CBDC would combine the best aspects of company scrips with those of wartime ration tickets!
I don't think the government is trying to protect drug dealers or tax evaders from themselves. You intentionally chose a weak argument to fight against.
Thanks, I forgot about all the new taxes this technology could enable. Why not put a tax on every private transaction? Maybe have it increase the closer it gets to the expiration date.
The amount of people rooting for big brother here on HN lately is frankly terrifying.
I have so many problems in my personal life, and I don't know how else they could be solved except for the government to carefully micromanage that for me.
I'm not rooting for or against anything other than shitty arguments. I come to this site to read smart takes, not half-baked sarcastic nonsense. Based on what I'm reading, maybe that's asking too much.
I doesn't give the Feds access to anything. Suppose I bank at Wells Fargo and my favorite coffee shop banks at Capitol One. If I pay the shop $4 for a latte, the fed will have NO IDEA who sent that money to whom or for what. All the Fed sees is $4 moving from the Wells to the Cap One Federal Reserve master accounts -- amid a blizzard of millions of other transactions. The difference from ACH is just that these payments are settled in big batches rather than one by one. The Fed will get new and better data on payment volume, but that's all, really.
For one, unlike cash, the issuing entity can program CBDC to expire on a specific date unless utilized. Another horror use case is that they could track and limit how many hamburgers or pizzas you eat daily, weekly, monthly or yearly!
Why would the government program money to expire? Would the money not become effectively worthless the closer to the expiration date? Why would a business accept transactions from people with money that’s about to expire would that then mean they would be giving away goods and services for free potentially?
If you are assuming how a hypothetical future currency will work then we could easily assume exactly the opposite and the money would be destroyed by a set date to maintain some stable rate of deflation. Do you have evidence that a time to live for a currency is being considered by the Federal Reserve and US government?
That’s fair enough. Ostensibly the government of any country should be accountable to the people but history shows that cannot be counted on.
As convenient as Apple Pay is, I would not vote for a cashless system. I am just confused that very specific ideas of how this hypothetical system is going to work and am not sure where these come from or why it has to work the way people say and not in a more accountable less abusive manner. Expiring money seems patently absurd so why a central bank would consider it seems so outlandish to me at least.
> Expiring money seems patently absurd so why a central bank would consider it seems so outlandish to me at least.
Some countries, like Costa Rica, do this with cash, but with a much longer timeframe. Every 10 years or so they launch new banknote designs, and the old ones are gradually removed from circulation, until can only be exchanged at the banks and eventually lose their value by becoming "demonetized".
In theory you spending it would reset the expiration date.
If you know your money will expire you will spend it, thus stimulating the economy. We also can’t have the dirty proles save their way to a higher social class.
Where are these theories of how a hypothetical future CBDC come from? Is there an official announcement from the Federal Reserve about how they would like it to work? A committee hearing in Congress where this is discussed?
The theories come from concerned critics mostly. As far as I know there has been no discussion as to how the government might influence the functionality of a CBDC.
“You could have a potentially […] darker world where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like say ammunition, or drugs, or pornography, or something of the sort“
Eswar Prasad, WEF Annual Meeting of the New Champions, June 2023
I don't get it. The government could just ban the things it doesn't want instead.
Also, nothing stops people from buying the goods in question by using a payment service provider/bank that provides a layer on top of the CDBC and automatically circulates the money for you behind the scenes to avoid the expiry.
There are easy ways to get around this. This isn't actually practical to implement. You could just buy and sell stocks within a second.
> We also can’t have the dirty proles save their way to a higher social class.
I don't know what you mean by this. Rich people spend their money at a slower rate than poor people so the rich would be disproportionately impacted by this. Someone living paycheck to paycheck isn't going to have much money that can expire to begin with.
The government could issue money that can be tied to a specific purpose (allowed to be spent with specific merchants or establishments) and have a time limit. Think of the COVID-19 assistance that was given to people. If — instead of just transferring normal money into people’s accounts that allowed people to do whatever they wanted with it whenever they wanted and wherever they wanted - the government could force recipients to spend it across certain things and not others, and gave a deadline to move the money around, would that be something that’s in the best interests of the receiver? By expiring money or by applying negative interest rates, the government can offload its burden on to the people who hold and have to use this money.
He merely suggested a small fee though. 5.1% per year and only on cash, not some CDBC with privacy concerns. If you keep your money on savings accounts you wouldn't pay anything. If the economy is growing you would get paid interest. If the economy is declining you might pay negative interest.
This is different from a coupon that expires instantly. That is a terrible idea. Don't do this.
Also, the idea of demurrage currencies is to replace the devaluation via inflation with a nominal fee so it is possible that in countries with high inflation rates, the new currency would end up losing less value over time simply because it maintains price stability easily.
Edit: btw. His theory is dated in the sense that Keynes and Dieter Suhr have an updated interpretation. With a hint of Fisher Black you are going to get one of the most interesting economic theories that can explain most of the suffering in the world based on very few assumptions. The money and land reform policy proposals still remain relevant today.
When the government does something unpopular against its own people, they can easily quell protestors at scale and force the usage of CBDC adoption by closing ATM withdrawals [0] add savings limits [1] and can incentivise spending with an expiring date. [2]
Whilst many HNers were celebrating UPI as the payment rails from India, it is almost the same thing as FedNow and is planning to put their own CBDC on UPI called E-RUPI [3] taking all the same valid concerns that I have mentioned.
Cash can be spent without being monitored or blocked.
A recent example of how this might be relevant is with the protests in Canada that lead to the freezing of the protesters’ bank accounts by the government. While I don’t agree with the protesters, the idea of the government freezing their accounts is alarming. After seeing such control exercised, it’s hard to be excited about a cashless society.
This feels like a boat that sailed long ago. I don't know anyone using cash for anything more than small incidental purchases, I'd say it's generally impossible to structure you life around using Cash at a large scale.
It makes me question why we allow government to be in charge of our money, and the price of money (interest rate meddling by govt contractor federalreserve). I suppose we grow up with it and don't question it.
I mean, that is true in the same way that if I want to create some shrutebucks and loan them out at the schrute reserve rate you are also free to loan out shrutebucks at whatever rate you want.
The fed may have a small advantage you are willfully overlooking.
If we believe neoclassical theory then if the fed sets the rate too high we get deflation and if the fed sets the interest rate too low we will get inflation and we will get those things very quickly with very little delay. This means that the policy rate would have to mirror whatever the optimal market rate is.
If we accept some minor inflation, then the fed is always setting the rate a bit too low rather than too high.
In other words. Whatever the Fed does, it is mostly irrelevant.
On the other hand, if there is actually some leeway and elasticity then monetary policy can actually result in increases in economic welfare. In this scenario we want to see some utilitarian meddling.
>It makes me question why we allow government to be in charge of our money
This isn't true. Private currencies exist(ed) and are afaik still legal.
The reason we put governments in charge of our money is that up until about a decade ago it was either the government or a corporation as a decentralizes currency was not really implementable. Do you want to get paid in amazon coins only redeemable on amazon? No, you do not.
>interest rate meddling by govt contractor federalreserve
You need to do that. Any currency needs some mechanism to control issuing. If not the government who else could do that?
> This isn't true. Private currencies exist(ed) and are afaik still legal.
For most of my life, those were ancient history or theoretical. Then in 2009, something changed.
And ever since then, I've seen nothing less than the most zealous propaganda campaign to undermine those... it's bizarre to watch it unfold. I keep side-eyeing everyone, wondering if I'm the only one that sees it. Sure, it doesn't help that the cryptocurrency people are whackjobs that might have screwed it all up without any outside help. But I guess they couldn't trusted to do that, so the help was provided.
Saying that it's "legal" doesn't change the fact that if someone were to come up with a private currency, gigantic forces, government and not, would be arrayed against them to put an end to it.
> Any currency needs some mechanism to control issuing. If not the government who else could do that?
I think the implication here is: who could be trusted to do it in a way that doesn't favor some at the expense of others?
>Saying that it's "legal" doesn't change the fact that if someone were to come up with a private currency, gigantic forces, government and not, would be arrayed against them to put an end to it.
Thousands of private currencies exist right now.
Nobody would care about your currency, since it is useless, and as such worthless. A centralized currency is an enormous social asset. Nobody wants private currencies.
>who could be trusted to do it in a way that doesn't favor some at the expense of others?
Just try to imagine a currency controlled by amazon. Do you think they won't do some hyperinflation making you poor once a decade?
The controller of a currency has enormous power. If the government can't handle it nobody can.
> Just try to imagine a currency controlled by amazon. Do you think they won't do some hyperinflation making you poor once a decade?
Do you think that the US government and the fed don't do this? You don't see it, of course, because they also report the numbers you use to decide if there is inflation.
And who says that it has to be controlled at all, in the sense that some singular entity controls it, rather than an algorithm?
> The controller of a currency has enormous power.
Yeh, and it's no less a problem when it's the government rather than Amazon.
>Do you think that the US government and the fed don't do this? You don't see it, of course, because they also report the numbers you use to decide if there is inflation.
Inflation is an objective measure it is the price increase for a certain basket of goods. Yes, you can fake it to a certain extent, but this is true for everything.
>You don't see it, of course
What? That is totally false. Inflation is one of the easiest metrics to spot.
>And who says that it has to be controlled at all, in the sense that some singular entity controls it, rather than an algorithm?
Practicality. Either the algorithm is extremely simple (BTC) or you will ruin your economy.
>Yeh, and it's no less a problem when it's the government rather than Amazon.
I have thought about building an algorithmic stable coin kind of like RAI but the problem is that actually defining and measuring a price level is the hard part.
Doing that on a nation state level means betting your economy on the algorithm always working correctly.
You also have to be resilient to attacks on your currency and an algorithm gives your oppponent certainty on how you will react. You need human control at some point.
Because it enables monetary policy which is in large part responsible for the most successful economic century in human history. Why do you think the "natural" interest rate is better than the feds?
Because you get bombed if you don't accept it. There's no "we have allowed", it is "they have imposed", and you and I were born into a slave system. Thank God there are ways to escape, such as crypto and foreign accounts.
I agree, American subjects have a much harder time to escape with foreign accounts, but where there's a will there's a way. The US also has some interesting domestic solutions, since it's a union of states.
If a country’s government really wants to get rid of a lot of large cash transactions, they could phase out some paper money like India (no cryptocurrency required) but in the US it doesn’t seem very likely?
Most money in the US already consists of electronic records in banks. Making bank transfers work better is fairly orthogonal to whether ATM’s work and retailers accept cash.
FedNow is a replacement for ACH which is an ancient, creaking monstrosity. If we can't ever replace or fix old, busted infrastructure because of conspiratorial rambling, we are fucked as a civilization.
I’ve seen a lot of crazy conspiracy theories reveal themselves to be true in the past five years.
Apply some critical thinking on this. Governments and corporate elites worldwide are salivating over the level of surveillance and control that a CBDC will enable.
The NSA monitoring any and all electronic communications (foreign and domestic) that they can get their hands on, without a warrant.
The federal government cutting off financial services for legal but disliked industries such as the gun industry (see the Obama admin's Operation Chokepoint).
The Canadian government freezing the bank accounts of those who supported the trucker protest.
Not directly related to finances or electronic surveillance, but some government fuckery greatest hits that actually happened:
- Kidnapping hobos and force feeding them LSD
- Intentionally infecting people (mostly black) with syphilis
- Feeding irradiated oatmeal to mentally handicapped children
- Obama personally ordering the execution of an American citizen without trial and having the military carry it out (and killing the target's 16-year old American citizen son as well)
C'mon. The OP makes a claim, which is unsubstantiated. Another user lists a whole list of issues, which might be objectionable, sure, but not what OP claimed.
Next thing you know somebody comes up with the moonlandings and JFK.
I'm writing this post for whoever is interested, so please don't take it as specifically directed towards you.
People who doubt the government and especially the fiat monetary system usually end up as "gold bugs", they start preparing for financial collapse by purchasing physical gold. Before the 2008 financial crisis, I was involved in gold circles online and everybody there knew a huge crisis was coming and they were buying as much gold as they could. Now, the price of physical gold (and many other commodities) are determined by the prices on the Comex futures exchange, which are under the control of an oligarchy of big banks.
During the financial crisis and the years after, most gold traders and gold bugs noticed that the gold price would drop every day about 09:00 on the New York Spot market, and everybody was talking about how the big banks were illicitly manipulating the gold price to try to keep it down. Of course this talk was dismissed by uninvolved as loony conspiracy theories, together with every other insulting and dismissing adjective that commenters here are so fond of.
But it turned out that the conspiracy was true, and in 2022 a couple of the bankers' fall guys were sentenced, and JP Morgan agreed to pay $920 million in fines[1]:
"The evidence at trial showed that between approximately May 2008 and August 2016, the defendants, along with other traders on the JPMorgan precious metals desk, engaged in a widespread spoofing, market manipulation, and fraud scheme. The defendants placed orders that they intended to cancel before execution in order to drive prices on orders they intended to execute on the opposite side of the market. The defendants engaged in thousands of deceptive trading sequences for gold, silver, platinum, and palladium futures contracts traded through the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc."
The same things are going on all the time, sometimes the perpetrators are banking giants, sometimes the government or parts of government, sometimes tech giants, sometimes it's all of them together, sometimes other perpetrators.
#2 The market can stay irrational longer than you can stay solvent.
These are widely known and I make no claims of originality. However, your story about gold market manipulation brings up a corollary to my #2 rule that I do take credit for: Never underestimate the extent to which governments and other vested interests will go to in order to keep markets irrational for as long as possible.
To the down-voters: Feel free to comment on why my post shouldn't be seen. It seems so petty and Reddit-like to just down-vote without saying anything.
I cannot abide. What is your point? That the last 5 years have seen _fewer_ true conspiracies and clownish gaslightings? Are you quibbling over the number 5 or something?
Possibly so, but an instant payment system is not a CBDC, and I don't see how keeping bank account transfers slow/impossible to initiate for individuals (as seems to be the case for ACH credit transfers) would help against pervasive government surveillance.
ACH and even check clearing are already largely performed by the Fed today!
> I’ve seen a lot of crazy conspiracy theories reveal themselves to be true in the past five years.
Such as what?
>Apply some critical thinking on this. Governments and corporate elites worldwide are salivating over the level of surveillance and control that a CBDC will enable.
How is this any different from the current system? Your cash is 99% digital anyway with basically every transaction completely monitor-able to the Feds under the right circumstances. Don't see how this situation would change much.
The principle difference is that CBDC is programmable rather than just digital. We aren't expressing concerns over a digital currency, but rather the degree to which a nefarious govt will have control over it.
I wouldn't worry too much about replacing the US Dollar entirely. We're pretty slow even to get rid of the penny. The US Dollar has a _lot_ of fans, I'm certainly one of them.
From what I see people on HN writing, by and large they downplay the risks of these as well as AI. Or alternately seem to suggest that CBDCs and national IDs are not coming, and that it’s a conspiracy theory. However, the “enshittification of Big Tech platforms” is already a fact, so they simply complain about it, but anytime solutions involving open source, decentralization, and utility tokens are introduced, they are violently voted down. So — since no solutions are welcomed, I guess many denizens of HN support hurtling toward extreme centralized control. After all, we’ll be able to complain about it once it’s in place, and that’s enough!
Edit: literally 5 seconds after I posted it, I received downvotes. Not fast enough for a human to read the message let alone explore the links. I wonder if it’s even automated by keyword now.
I would love to see government IDs be available as a form of auth on the internet. It would open up the possibility of real-person communities with fewer bots and trolls.
Similarly with digital payments, I'd much rather trust the government with that than some rando cryptobro of the week.
There is nothing extreme about this. The government already does both functions in the analog world. It's about time they caught up digitally.
Meanwhile some YouTuber screeching about some Bible quote... not a convincing start
Edit: didn't downvote you btw, just don't agree that this is a bad thing
The military? When was the last time they turned on the citizens? I don't live in Tiananmen, thankfully. Meanwhile it's private companies that oppress most of us: private hospitals, private prisons, private insurances companies, private credit bureaus, private banks, private tech companies, private surveillance companies, private small arms manufacturers and dealers. It ain't the government that's crimping my freedoms.
Taxes? So I get some roads and schools and parks and old people healthcare, and lose some to corruption. Better that than making Bezos and Zucky even richer.
Forget the military, when was the last time the government used force on its own citizens? Probably 1 second ago, and thousands of times a day. Are you really more oppressed by a private hospital today than you are by literally thousands of laws that have penalties that will put you in prison? I'm not pro private hospital, or anti-law, but let's be real about who has ultimate control of your freedom. Even if we grant the threat to your freedom by a private [fill in the blank], that entity only is allowed to exist by dint of the government. Not a coincidence that many of your examples are the most regulated industries, or directly in business with Government (hospitals, firearms manufactures, prisons, insurance companies).
If the question is "are you really more oppressed by the private sector than the government"... then the answer for me is, 100% yes. Healthcare is a big one (the insurance industry, along with Republicans, not wanting single-payer). Tax filing is another one (damn you, Intuit). Hospital pricing opacity another one (until recently).
Meanwhile the government protects many of my "freedoms" from private intrusions when it comes to things like bankruptcy protections, credit bureau limitations, telemarketing, angry gunowners, etc.
I've run into trouble with the law on a few occasions, but it was never terribly oppressive -- probably largely thanks to my race, class, and politics. If I were a poor Black man or a conservative white man, I'd probably have a very different view of government.
Thinking about it some more, I think think this just circles back to the old "freedom from" and "freedom to" debate... not sure that's worth getting too much into here, since we're unlikely to change anyone's minds or reveal new perspectives.
If your government's military wanted to oppress you, PayPal wouldn't protect you from the consequences. No payment system ever conceived by even the stanchest technoanarchist is immune to bullets.
It's a bit ironic... all this talk about crypto evading government hasn't really changed much. Then you have multinationals like Meta and Apple that really do have more money and power than most governments because of their centralization and scale.
The idea that the USD you earn in a wage is "yours" and the government has no right to tax it makes no sense to me. They printed the money. Your wage wouldn't exist without the government making the modern economy possible (in more ways than just printing it). Many of our jobs wouldn't even exist without the government's participation in the economy.
Governments are far harder to remove than tech firms. You may be able to ditch Google, but there's only one government in your country. And "democracy" doesn't prevent state surveillance.
Most politicians back it, so voting differently makes little difference. Labour and the Conservatives support the Online Safety Bill, the Patriot Act was bipartisan, and voters have very little control over the EU and can’t stop Chat Control. And most of “government” isn’t directly elected: you can’t vote out the NSA, and Congress has little power over them either. The government blunts corporate abuses but doesn’t stop them: revolving doors ensure authorities target small fry while big companies like Visa keep going unimpeded. And finally, most voters don’t mind surveillance that much, since government and media manufacture consent for it. Don’t count on ordinary people to “vote it out” until it’s too late.
Lobbying against government surveillance helps marginally, but it's an eternal struggle. Governments take as much power as they can get, while abuses are exponentially harder to detect and stop than refusing to grant that power in the first place. The “slippery slope” isn’t a fallacy, it’s the record of the last twenty years. Don’t let them track speech and money with a central ID and digital currency, just because you don’t like a few tech bros or online trolls.
> Governments are far harder to remove than tech firms. You may be able to ditch Google
Ditching Google is not the same thing as removing Google from governance of your life, though. I don't use Google search, but I am sure they know who I am and sell that data to anyone who wants it, including government agencies which can't legally obtain that data on their own due (ostensibly) to citizen oversight.
Realistically, the average person has exactly 0 chance of "removing" either a government or a big multinational company.
However, the average person at least has some teeny tiny say in government via democratic processes and oversights. They have zero power against a big company unless they are a major shareholder.
The fundamental difference of "one person, one vote" and "one dollar, one vote" should not be lost in this discussion.
Big bureaucracies are terribly disempowering no matter who runs them, but in government at least you have some tiny amount of representation vs zero in the private sector.
My concern with digital payments is the elimination of cash. Having the ability to transfer value without it being monitored or blocked is an exceptionally useful property of paper money.
I don't trust the govt quite as much as you, but could see this being a useful govt function if the issuing body didn't maintain any record of when, where, or why an ID was used--and only acted to verify the authenticity of an ID.
I don't know if it's really a matter of "trusting" the government, but of accepting that they already have access to most of my data anyway. Between credit cards, IP logs, subpoenas, national security letters, warrantless wiretapping, etc., they already know everything there is to know about me.
What makes this tradeoff (of convenience vs privacy) acceptable to me is not that I trust the government, but that I already accept I have near-zero privacy right now, as it is. Making it slightly easier for them isn't a big deal. I'm not a very exciting person to begin with.
And frankly I suspect that outside of techno-libertarian echo chambers, this is the case for most regular people. They just don't really care if the government knows about them. Not everyone has the same degree of desire/need for privacy.
I also fit into that camp of un-interesting people you're describing, but I'd say the intersections between privacy and law are a bit more underhanded and dangerous than the intersections between privacy and corporations.
In legal circles, for example, there's the refrain that you should never share unnecessary information with police, even if you're well intentioned and have nothing to hide, because innocence isn't a preclusion from being royally fucked in court. It's true that "the government" as a homogenous blob has mountains of information on you, but I guess I'm not so eager to dissolve what few helpful divisions within that blob exist.
On the whole though I agree that my information existing somewhere in that blob isn't the hugest deal.
> I would love to see government IDs be available as a form of auth on the internet. It would open up the possibility of real-person communities with fewer bots and trolls.
And reintroduce all the chilling effects of knowing everything you say is on a permanent record linked to your name. I know the government wouldn't be running the sites, but they'd have activity metadata, and data breaches could be correlated to work out who the "opaque" ID refers to (perhaps it would be possible to mitigate that by having the IdP identify users to the site as a hash combining the site and the user. Not sure). There are a few types of companies that may have a genuine reason for requiring government auth, but generally we should not make it easy for Facebook or Google to require it
A community with fewer bots and trolls should be accomplished with moderation, and not just allowing a firehose of signups
Ideally, the government login/auth would be an opt-in for sites where anonymity isn't important. Facebook, for example, already has a real-name policy but still has fake accounts. Moderation alone isn't sufficient; it's hard to keep up with the number of bad actors. Limiting signups to verified humans, and possibly validating their nationality, can help with that IRT to bots and foreign agents.
It's important that the mechanism be opt-in, though, and yeah, metadata would be a problem. But realistically it's just a matter of degree... they already have access to all of that metadata today with just a subpoena or national security letter. Centralizing the login would make it easier for them to collect it, but also make it easier to audit via government mechanisms (FOIAs, etc.) compared to the opacity of private companies (which are under zero obligation to reveal how things are stored).
And that's OK. I'm sure there would still be anonymous forums, the 4chans and reddits of the world and such. But this would enable real-identity communities that we don't currently have, useful for things like public comments and discussions for local news (god, those newspaper comment sections are horrible right now), government requests for comments (like when they're starting a new development or changing land use or whatever), things like a public version of Nextdoor/Yelp/etc.
The hope is not that it would kill anonymity altogether, but that it would create some alternative communities linked to real-world identities, and maybe that would help people behave better, with real-world decorum, in those specific identities. Yeah, some people would never sign up for those... and maybe that's OK, as long as the remaining community is more civil and thoughtful?
> maybe that would help people behave better, with real-world decorum, in those specific identities
I don't think that would be the result, really, because when sites do have real identity requirements, it doesn't increase civility much, if any.
I think it's the absence of a physical presence that makes people feel OK with being less civil. Emotionally, it doesn't feel like you're talking with real people.
> Meanwhile some YouTuber screeching about some Bible quote
Why do you lie when it takes 1 second to verify the facts? I wasn't interested, but clicked on the video and the man is talking in a calm and collected manner, not even close to "screeching". Or is it always "screeching" when somebody says something you disagree with?
The way they got SSNs through is by promising that it would be illegal to use them for identification. The only remnant of that is that it (still?) remains illegal to refuse services to people who refuse to give their social security numbers, although if you do it you'll break customer service.
Between passports, SSNs, state IDs, your birthday, homeowner records, and metadata like addresses/phone numbers/employers, it's already trivially easy for any actor to fingerprint you anyway. Even the private sector does this for cheap. To say nothing of biometrics like facial recognition, which ironically, the government sometimes tries to protect you from (like in Illinois, where it's banned).
It's so weird to me that people are afraid of the government knowing who you are when like every private company asks for the same kind of information all the time, and data brokers gobble that up and resell it all the time (including to government), and nobody bats an eye.
> The government already has the power to do this — just ask any trans person in the South
Any citations on every trans person in the South being singled out for denial of services by the government? Because that sounds like inflammatory nonsense.
Banning gender affirming care effectively is singling out transgender people and denying them services[0]. Additionally there was a recent Supreme Court decision allowing businesses to discriminate against people[1].
Additionally in living memory, many businesses and government services were segregated by race. In some cases some races were denied access to services or those services were severely underfunded. The legacy of that legal system still has impacts today.
> Banning gender affirming care effectively is singling out transgender people
For children. Or for state funding, but the state doesn't pay for the vast majority of plastic surgery.
> Additionally in living memory, many businesses and government services were segregated by race.
Race doesn't need affirming medical care, or identification to single out. Also, businesses and government services weren't abstractly segregated by race, they were specifically discriminatory toward black people.
1. The grandparent comment asked for “Any citations on every trans person in the South being singled out for denial of services by the government.” The great grandparent comment only mentions asking the opinion of a transgender person if the government has the power to deny services to them. By banning gender affirming care, even just for children, wouldn’t that be an example of government discrimination against transgender people?
2. The example of racial segregation was to point out an additional time that a minority group was discriminated against. Black people getting less than adequate medical treatment is not them needing specific affirmative care and being denied it but an example of discrimination that was government sanctioned. Beyond pointing to the two sets of laws and their discriminatory natures the link is superficial, just another example of legal discrimination.
I cannot speak for you but denying the government the power to discriminate or oppress minorities and empowering the rights of individuals to life, liberty, and the pursuit of happiness is worthwhile to me. Which is why seeing all these states pass these discriminatory laws is disheartening.
I see it as an almost total impracticality to transition from our current system to a centralized national identity document.
There is no central database of:
* Citizenship
* Births
* Drivers Licenses
* Marriages
* Deaths (SSA death reporting is voluntary and customary by funeral homes -not required)
* Education history
* Criminal Records
* Firearm Ownership
* Property Ownership
* Vehicle Ownership
The only thing the feds or even the state government has a certain idea of is, how much you made in a given reporting period - not that reporting periods always overlap in any meaningful way. There is no requirement (as far as I can tell) to even request a social security number - most parents do, because they want to claim their children on their taxes.
Now, many of those records do exist - they exist at the county, state or local level in some manner or fashion - and of course, its not standardized either, sometimes its at the county, sometimes the state, sometimes at the county or state for the same record type based on year. (e.g. Marriages from 1902-1962 are in county records, and 1962 to current in state, or the other way around.)
Trying to link all of this data in a meaningful way, would be a monumental task that would likely require a vast amount of manual data matching - and it would still be wrong 40% of the time.
They could do an audit and census approach as a one off to get all this started. For a national ID though wouldn't you only need drivers license / property data / marriage data / criminal data / citizenship / births?
Not sure you need firearm / vehicle / education history for an ID system
In this case CBDCs (the interest bearing kind) actually have the potential of disintermediating banks. Or atleast reducing credit/liquidity risk. Grandma's savings/deposits arent going to evaporate the next time a bank collapses. Cause her CBDCs are going to be sitting in her wallet.
It's also wildly inconsistent. The same political factions (vs individuals) that complain about Real ID also complain endlessly about fake ID. They complain about illegal voting, but also support the drive to withdraw their states from ERIC, which has done a good job in detecting illegal voting. Basically they're sometimes against solutions because their complaints infrastructure generates a reliable stream of political and financial capital from the credulous.
Comically, the primary national ID we use is one specifically designed not to be a national ID.
The secondary "national" IDs most of us use are simply state IDs or driver's licenses. They're not in a federal database, but I don't understand how that's meaningfully different. It's still a big government tracking system.
It was obvious from the first line that your post was going to be axe-grindey conspiracy fodder. It's not us, it's you and your and tightly closed epistemological loops.
Nobody has seriously discussed a CBDC for months in the U.S. FedNow is the American financial system catching up to the 1990s. It has nothing to do with crypto beyond the cursory.
Right now, you hold your money digitally with a bank. The bank holds its money digitally with the Fed. If your bank caught fire, the bank and its insurers would be responsible for getting you your money back.
A CBDC would mean cutting out the bank - you would hold your money digitally with the Fed, and the Fed would be liable for it.
FedNow creates a ledger that allows two banks holding their money digitally with the Fed make an instant transfer. You never become a direct customer of the Fed, but your bank and the bank of the person you're exchanging money with - both already Fed customers - have a quicker way to record the transfer.
The only relation between FedNow and a CBDC is that the Fed is involved, and, like, computers, I guess? Other than that, their mechanisms and effects have very little in common.
> Powell seriously discussed CBDC in his recent testimony to congress. He mentioned it was far off
It isn't being seriously discussed for implementation. The working groups are disbanded. The Fed won't write it off--they shouldn't. But CBDCs are as proximate as postal banking.
It's kind of strange that in other threads HNers will lament the end of the nerd internet and how everything is corporatized and 1984 wasn't a manual, and then here they downvote you.
I'm glad the US is finally catching up the rest of the world...India already has the Unified Payments Interface (UPI) [0]. Additionally, I think fears of this turning into a CBDC are overblown. Banks already have to settle transactions between banks through reserve transfers via the Fed...this will just help automate that process so we can send money from bank account to bank account. Like a Zelle or Venmo, but government backed!
India’s system is more usable, though, apparently. This seems like an improvement but it doesn’t do the same thing?
> Because UPI is designed to be intermediated by computers rather than by humans, transactional information gets captured by the payments company while the transaction is in progress, and that can tell the clerk (or cron job) that the payment succeeded without them needing access to the bank account.
> This is a fun engineering challenge in many countries, which are often overlaying bank transfers as a payment method on top of bank transfers as a settlement method.
[…]
> Bank transfers are an extremely small percentage of customer-to-business payments in the U.S. In addition to the speed issue, which might get improved by FedNow when it launches (wags have referred to it as FedLater), bank payments have no consistent way to receive metadata, and despite being no-cost they compete with well-developed credit card ecosystems which credibly offer better-than-free pricing through rewards schemes (to the customer, who generally gets to choose which payment method they use to transact).
Reward schemes are funded by interchange fees funded by higher product prices. They are a tax on the entire economy. Merchants can push the CC fees to customers who opt to pay with CCs vs cheap or free instant payment systems. T-Mobile has dropped autopay discounts if you use a credit card vs deposit/bank accounts for payment, for example. Walmart wrote public comments on this topic supporting the FedNow implementation.
Reward systems won’t last as merchants push towards FedNow as a payment alternative and charge you to use a credit card. Nor should they last.
> Walmart has observed a severe misalignment of incentives that has plagued the payments system in the United States for decades. Certain incumbents and large participants enjoy massive profits by stifling innovation in payments, ensuring that account access is limited to a small number of networks, and perpetuating barriers to entry for alternative solutions. Controlling this access allows the dominant players to extract rents from other payments system participants, ultimately resulting in higher costs for all consumers, particularly consumers who are unbanked or underbanked.
My Citi Custom Cash card gives me 5% back on gas station purchases (my highest category), even paying the higher price at the pump for credit cards I still come out ahead. I'm fairly certain Citi is not making 5% on interchange fees
Isn't it easier to assume Citi is recovering the 5% via interchange fees versus Citi is losing money every time a customer uses an advertised card feature.
Citi is definitely not earning 5% via interchange fees, this is known. While they might lose some money on the 5% for some credit card users that use it correctly, it is most likely more than made up for by other credit card users who either use the credit card for other types of purchases and receive much less in rewards, resulting in a net gain.
Or citi has figured out that certain users of the card carry a balance and they spend more on interest than it costs in Citi in rewards. If the situation changes and Citi is losing money, then they change the reward amount.
It’s a loss leader that is usually capped. They are marketing against other cards in your wallet. Most consumers use a card or two so the habit of buying gas drives more spend.
Discover does the same thing with quarterly promos. They are paying 5% for the first $1500 of Apple Pay/Google Pay transactions… an incentive to add Discover to your wallet.
Gas is also unique. Our local supermarket chain gives you gas discounts for spend. People are always annoyed about gas so they fixate on saving $1/gallon, forgetting that they spent $1000 at the most expensive grocery chain so they can save $12-20 for a fillup. That $12 probably cost them $50.
You could think of credit card rewards as a form of price discrimination similar to coupons. Whether you get the higher or lower price depends on what you do. Credit cards with high rewards are discount cards.
There are many ways to pay and they have different discount rates. Some places have a cash discount, for example.
As a "tax," this falls on people who don't shop around for whatever reason. Some of them are wealthy and can't be bothered to play this game. Others might not find playing the game feasible for other reasons.
> India already has the Unified Payments Interface (UPI) [0]. Additionally, I think fears of this turning into a CBDC are overblown.
Yet, India is already working on E-RUPI [0] which is a CBDC on top of UPI by the Reserve Bank of India, also shown in the same Wikipedia link you just used. Eventually, FedNow will just be the rails for a US dollar CBDC.
The next time a protest happens in India after their government does something extremely unpopular, you'll see why CBDCs are a nightmare not to be ignored. This is why governments around the world are working with many central banks with pilot schemes to test them out and eventually roll their own.
> Like a Zelle or Venmo, but government backed!
Look where that went for Zelle. [1] A vehicle for rampant fraud on the system.
> Eventually, FedNow will just be the rails for a US dollar CBDC
This is unfounded. FedNow is a faster classical payment rail. CBDCs involve the central bank taking on a customer-facing role. The Fed has no desire, nor frankly basis in law, to do that. The only reason the two are linked is crypto (a) prompted the first serious discussion about American payments modernization and (b) promoters are using it as a thread by which to hang onto a dream of mainstream crypto.
The central bank digital currency concept has little to do with FedNow. It's denominated in dollars, and is cleared by all parties keeping ledgers which are compared if they differ. But between the crypto people and some right-wing conspiracy mongers, the two are being connected in some social media.
Zelle has been a nightmare to use. Apparently they rolled out a major update that caused many financial institutions to drop support. Because of that, my phone number is now unusable/blocklisted in their system because it's in a limbo state that neither Zelle nor my bank can fix
The Federal reserve banks are only one operator of ACH, with there also being a second private operator. The fed denies that Fednow will replace ACH.
Not sure if that denial makes much sense, although it certainly could take a long time to replace ACH even if it eventually does, simply due to how many systems interact over ACH, and that many of them will not be high priority to change.
I'm also a little surprised that FedNow went with real-time gross settlement, simply because that means posting every transaction to a Federal reserve account (which would be a large increase in transaction volume for those accounts, relative to say daily or even hourly net settlement). Reading Operating Circular No. 8 tells me that is exactly what they are doing, which is honestly a little impressive.
It surprises me because in Canada the Interac e-transfer system has been flawless in my anecdotal cases. Albeit one known issue is reversals allowing fraud, but I assume any non-cryptographic solution will have the same issue.
They could theoretically, but it is unlikely due to each transaction costing a few cents and the monthly FedNow fee being $25 (it is a utility run on a cost recovery basis). No banks charge for Zelle payments to my knowledge, for example.
This eventually replaces checks, money orders, Zelle, Venmo, ACH, and probably credit card payment volume over time (as seen with UPI in India and PIX in Brazil). Every deposit account can send to other deposit accounts instantly.
Given how generous credit card rewards are in the US, combined with the interest rates that get charged to people who buy things they can't afford, I don't see it replacing credit cards.
5% is still in the realm of cashback rewards, I use my Citi Custom Cash card to purchase gas and receive 5% back (it is cheaper this way even though the credit price is usually 10c higher per gallon)
Typically banks have many routing numbers[1], but it seems like they grossly undercharging banks here. Should be like $500/mo per routing number, that's still chump change for banks.
I know you're making a point but there is a distinct difference in risk: FedNow transactions happen instantly, therefore fraud can take place faster.
That's all though. That's not a good reason to stay on FedACH.
For the HN crowd the best way to describe the difference between FedACH and FedNow is migrating from a batch-based system that settled transactions a few times/day to a real-time system. Just like such migrations developers and engineers encounter in many normal IT environments, real-time systems have their own issues but are also capable of so much more and are generally easier to improve/evolve.
FedACH was made for big, one-time transfers between bank accounts where it wouldn't matter too much if settlement took a few days. FedNow was made for lots of small(er) instantaneous transactions.
At first FedNow will likely be used as a simple replacement for ACH transfers but I suspect that it will eventually replace the back ends that handle debit card payments (because the prize--which would be taken from Visa, MasterCard, First Data, and similar--is too big to ignore).
Feds already get money transfer data without warrants. Recently Chase closed my checking account because I use Zelle so often. Chase knows all Zelle records because they partially own Zelle. I would rather have Feds own the data, rather than banks. When banks own data, they make decisions to close people’s bank accounts without any proof of abuse.
Amazing news. Kinda sad to see that Stripe was not on the list of early adopters but I'm sure they will implement it soon.
In Switzerland we build an awesome eBill system ontop of the equivalent thing to FedNow. Its all run by Six Group which is the biggest Stock Exchange but it is jointly owned by the big banks and government. So they all agreed to add this eBilling system. Its so much superior to having paper come in the mail all the time.
So much is possible once you have instantly confirming transactions supported by all banks. Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
I've been receiving and sending all my bills and invoices by e-mail for the last decade, without any need for some awesome or amazing system. I'm sure millions do the same.
You attach for example a PDF file with the invoice, including bank account number etc. The person receiving the invoice logs into his or her online bank and pays it.
Since decent online banks will let you save the details of recipients, in practice it is very smooth and uncomplicated.
You could also receive and send invoices by fax, and there's nothing wrong with that.
In many cases that is just the bank printing a check that is mailed to the recipient.
Sure, it works. But it's super slow and archaic. In the same way some people think people writing personal checks works, but others think its ridiculous.
That's not how the invoices I receive or send are. They are real invoices with specification, sum to be paid, who to pay it to and date to pay. So let's take a bog-standard example: Your phone bill. Get the invoice in your e-mail, see what amount they want, log in to the bank, select them as the recipient, fill in the sum and paste the reference number. Assuming you're saving recipients in your online bank.
There's nothing slow or archaic about that, at least I haven't noticed that after a few thousand invoices sent and received by e-mail. With modern banks you can even make batch payment of invoices by uploading a csv file.
> Kinda sad to see that Stripe was not on the list of early adopters but I'm sure they will implement it soon.
Given Stripe's role in the system, it doesn't make sense for them to support it until there's sufficient support from the banks as well. Until banks support it, it doesn't matter if Stripe (or any payment platform) does, because the users won't see any benefit.
> Driving the news: "We're tracking it closely," President of Product and Business Will Gaybrick says, noting the company is not actively working on anything related to FedNow. "I really do think real-time payments are going to be a big deal."
> "As I understand FedNow, there isn't yet a mandate, so banks don't have to implement it," he added. "For things to completely change the landscape of payments, you need universal coverage."
> If, for instance, only 30% of banks support FedNow, then it's unlikely to become a priority for merchants to adopt the system.
> The Financial Technology Association, which represents fintechs including Block, Marqeta, Stripe and Wise, among others, is urging the Fed to make direct access to the new faster payments system, called FedNow, more widely available so fintechs can tap the new service without going through banks.
> Generally, only licensed banks have access to the Fed’s master accounts, giving them clearance to use FedNow’s faster payments system when it’s available, but nonbank fintechs argue it’s shortsighted to exclude them from the same direct access to the new public system. While there is also The Clearing House’s rival RTP Network, the new FedNow system may provide more cost-effective services.
> Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
I wish I, and anyone else, could get a bank account directly with the federal reserve bank.
> According to a 2021 report by the Federal Deposit Insurance Corporation (FDIC), an estimated 7.1 million adults in the United States do not have a bank account. This number represents about 2.4% of the adult population.
You could even place limits to "child-proof" such accounts.
I'd be ok with not allowing the account balance to get below zero or exceed the FDIC insured limit.
My only condition is nobody should be banned from it or kicked out for any reason.
You could say this account earns no interest (as long as there are no account maintenance fees or transaction fees).
How could stripe adopt this? Accounts are limited to depository institutions, aka banks. Stripe is a money transmitter, and their customers are businesses.
So when can businesses start utilizing this to replace ACH? I run a b2b company and right now ACH is our most popular payment option, but the settlement time is a pain.
Right away. My organization verified that an account at one of our banks could send thousands of dollars to an account at another bank, in seconds, and then send it back. It's pretty cool. :-)
Is there going to be a universal SDK / API we can use with this? This would cut alot of middle companies out of the payments industry (or at least put pressure on lowering fees). That would be a huge win.
Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
> Is there going to be a universal SDK / API we can use with this?
There is probably a neobank opportunity in providing this. FedNow is, reasonably, administered by banks. (The Fed doesn't want to provide end-user customer service nor incur liability for fraud.)
Right. I suppose that makes sense. I’m thinking about ease of startup costs for institutions that want to use it financially. The Fed would need to support that anyway. Perhaps by not limiting a qualifying institution to just banks but also opening up access to financial service firms would be enough. They could just have some sort of fair priced qualifying program that a company has to maintain to access it or something
Currently this works between banks only. Banks have reserves at the Fed, and those reserves are what gets adjusted when a FedNow transaction happens. The banks then adjust their own records on their customers' behalf.
The fed lists a number of service providers on their page. I assume they will now roll out some interfaces. Glad to see the US banking system start to catch up with the rest of the world ca mid 90s.
Walmart supported FedNow when it was in development. I'd bet they want to save those credit card fees they currently pay for people buying their groceries with them.
Some crypto maximalists ignore many of the intrinsic aspects of crypto (decentralized consensus, cryptography, etc.) because in their use case, it's just 'digital money.'
So when a completely dissimilar example of 'digital money' comes up, they equate it to crypto, even though it lacks many of the intrinsic aspects of crypto.
None of the intrinsic aspects of crypto matter if its in a centralized exchange. In the cases of a centralized exchange BTC may as well equal fiat, for it has all of the downsides of fiat alongside the risk of an exit scam/mass theft, and with none of the insurances one may have with a fiat institution.
So, unfortunately, for these “crypto” maximalists, the crypto aspect of their digital currency is just some fun trivia and not something they even bother to leverage.
I work with a couple of organisations that have been advising public institutions on their investigations into CBDCs, and the entire timeline of FedNow development took place after CBDCs had initially been conceptualised. CBDCs became a mainstream concept in 2016 when the Bank of England started discussing them publicly. The Faster Payments Taskforce report (which was the basis of FedNow’s design) came out in 2017, and the Fed announced its plans to start work on FedNow in 2019. Many advanced economies announced plans to start seriously investigating the use of CDBCs in 2021, but they’d all been discussing the concept for years at that point.
I don’t know whether the fed’s investigation into CBDCs will result in it adopting one. But FedNow has been designed in such a way that it could easily be modified to support one. You’d just have to implement a version of it where the allowed participants were everybody who’s allowed to have a bank account, rather than only banks.
>But FedNow has been designed in such a way that it could easily be modified to support one.
Curious how this would work, it would be a pretty big inversion of asset control to make it work.
Saying "just have to" is a very big "just", considering it was aimed at only a few thousand institutions with very tight reporting requirements being the target audience instead of hundreds of millions of nontechnical users that would need something that just werks.
From the Fed's perspective it would be mostly changes to business processes to allow this to happen. Making it just work for end-users would could work in exactly the same way non-central bank digital currencies currently work, as in 3rd party institutions manage customer interfaces.
It's also not like bitcoin because the exchange doesn't own dollars deposited at them and isn't run by a guy living in Dubai who's going to steal all of it.
this is an odd consensus because you just described how all bitcoin exchanges in the US operate.
they are centralized in which funds can be seized, censored, and they all have money services licenses just like their corresponding banks do.
right, not like bitcoin, like bitcoin exchanges, just like the person said and you somehow ignored.
far more similarities than differences for this comment and the other comments at your level to be focusing on the differences and confused about the existence of similarities.
Go old school neighborly. Convert it into something your friends or family want, then trade with them for the cash you want. If you don't know anyone that wants to help you reduce your bags of btc or eth, then consider finding a different community.
No, completely opposite. It is like a regular, centralized, and controlled by the government ledger[1] but faster, no more batch files at the end of the day like ACH and that is all.
Now is a matter of banks to pay the providers[2] to integrate with their systems and ledgers.
It won't take long before all banks are using it. Once the banks are using it, employers will begin making payments using it. Once employees are receiving digital currency payments from employers, cash will end soon after.
Maybe a long time ago, but I get my pay which is supposed to be on the 1st and 15th on like the 13th and 29th or something. Getting paid "two days early" is a pretty common feature with Direct Deposit these days. It is always credited to my account before my actual paycheck technically gets posed.
> maybe charging a transaction fee
I imagine someone would be paying for the transaction of physically handling all the cash, no? Its not like having all the logistics of handling cash to potentially thousands of employees is a zero dollar cost. I imagine its massively cheaper for everyone to pay whatever marginal cost my employer is paying for ACH/DirectDeposit through their payroll app than paying a ton of people to handle and keep track of the cash.
Getting paid early is essentially an automatic "Payday loan" provided by whoever you bank with (whatever institution receives your payhecks) as a perk of banking with them. I personally decline this service, because I don't like adding a paycheck-sized liability to my accounting books for two days.
My bank seems to trust my paycheck deposits, though, and they "clear" (update my balance and become spendable) under 24hrs after they show up as "pending."
They're based on notification from they payroll company about the incoming paycheck. They're not just assumed by the bank to be there, and I'm not charged any interest on it, so I wouldn't necessarily lump them into the same category as "payday loans" which usually carry extremely high interest rates and often don't actually have any basis on truly knowing if the paycheck is incoming or not. Getting paid early is not similar to going to a payday loan vendor and getting a loan.
So when my bank is crediting my account with my paycheck early, its because my work told them I'm getting paid that amount. Otherwise they wouldn't necessarily know of the amount. Sure, its like some kind of loan in a way, but its essentially paperovering the slowness of the ACH to actually clear in a decent timeframe.
Direct Deposit. The banks can see the incoming transaction before the amounts clear. Payroll often starts the process two days early anyways since they try and get it to land on the 1st and 15th or whatever the dates are, so when the bank sees the incoming transaction it'll just automatically give me the funds while the clearing happens in the background.
Its honestly the same kind of logic they're using when you deposit your paycheck and it seems to clear turbo fast.
Huh? Employers pay employees via direct deposit in many (most?) cases. This isn’t any different… Either way it’s money moving from one bank account to another digitally.
Shameless plug, but Moov offers a single API for payments. The clearing house's RTP system will be supported shortly, and FedNow is coming soon after. Check out out here: https://moov.io/
Agreed. This is really strange from their pricing page:
>> Get started for free to test our APIs & unblock your development team. Talk to us about your transaction volume to get the best pricing with flexibility to grow.
You would think there would _at least_ be a ceiling price. Makes me wonder why they can't show _any_ pricing.
however, the payment itself is almost besides the point. the tricky part is the scheme / governance surrounding payments. who is liable for what, preventing fraud, etc. these large payment actors + the middlemen are more about fostering trust networks than moving the actual dollars and cents.
fraud in P2P payment networks (e.g. Zelle) is already a huge issue because a lack of a governing actor like a card network.[0] a different question is would the government ever provide this mediating role / lay out guidelines? would we want it to?
This is usually never the way it happens. The government does not make market ending decisions on a whim. It would have already met with the biggest stakeholders and fedNow is likely the result of many considerations and compromises. Visa will likely not be threatened any time soon.
Yeah. Unlike UPI in India, FedNow is not mandatory for anyone. But companies could still offer "discounts" to customers when they use FedNow, as they save on credit card fees.
UPI is not mandatory in India, don't know where and why such a message circulates. If I am benefitting with Credit Cards at petrol pumps, I deliberately use it and there's no concern from anybody. Merchants prefer UPI (for now) because money goes to their bank account without any cost. And cash still works at most places where UPI does.
Besides this, stakeholders/partners of the NPCI are mandated to offer UPI services. I'm not sure if signing up was optional, but it would honestly be suicidal for a bank not to, given that there are so many competitors offering the same.
I can see why that's the case for high turnover companies. It is to track and reduce money laundering and tax evasion. Also, it has become a no brainer for any consumer facing company to not provide UPI as an option.
I keep appreciating the regulations in India, it is overall supportive of the common man. From say SEBI regulations on derivative markets to digital payments. For eg. credit cards are becoming less frequent, people here won't take out their cards for every other expense. People have become aware of the fact that money at the end is in bank and spending from the bank account hits much more real than a 30 day stream of cash 3-4 times your salary handed to you whenever you need. And so, low income and middle income groups spend wisely and don't get caught in spend cycles above their capacity.
Such an angle goes unappreciated, but hopefully this continues and money still be real and in our pocket.
No. This is an interface for banks to settle between themselves.
A bank does not want to interact with you in the same channel as it interacts with another bank.
What there will be are services provided by banks which utilize this for instant transfers.
The middle companies between transfers you want. Most of the actual work is fraud prevention and dispute resolution... unless you want the only means of settling a dispute is through the courts.
> This would cut alot of middle companies out of the payments industry
Not really. All it will do is let the same companies change the way they handle average citizens' payments.
It's the same as Open Banking in Europe. It is supposed allow small businesses to leverage this to enable innovation and all that stuff, but when you want to use these APIs you find there are limitations on who can actually use it. For example, you can only put your service to production by being on a "directory" of approved providers, and to be on that directory you need something 25k or 50k in an account. So, not really that useful for a small startup wanting to make a product out of it.
Banking systems are the backbone of world power dominance, big players won't let small people share it.
I would assume such a system is capable of facilitating fraud, so it's probably good to have some kind of financial hurdle you have to jump in order to use it? Not that having $25k or $50k is a guarantee that you aren't a fraudster, but I imagine there are a lot of would-be fraudsters who don't have that kind of cash on hand.
I do think this is a bit of a weak justification, though.
> So, not really that useful for a small startup wanting to make a product out of it.
I mean, 50k puts it out of “a couple people starting something in their garage”, but it doesn’t really lock out much beyond that. That’s pretty close to the franchise fee for opening a McDonald’s.
Yes, it could be more equitable, but if that’s the only barrier to access, it’s… pretty open for even quite small businesses.
50k is small peanuts, even for a friends and family round. I’d expect any startup dealing with banking transactions on my or my businesses’s behalf to have at least that much in a bond or escrowed away for counterparty risk.
A lot of people complain that 50k isn't much of a hurdle. Yes, I also agree that I as an individual can actually get that loan tomorrow if I want, but the point is "open" banking is meant to open up opportunities and should have as little hurdles as possible and the 50k is just one example.
Look into going into the business and you will realise other hurdles like having some insurance that will cost you tens of thousands, and more costs. When you compare that, say, creating an app and putting it up on an app store, we can agree that there is a huge difference.
Of course I understand that banking means playing with people's money and therefore measures need to be put in place. But instead of requiring financial assets maybe the 'measure' should all be around technology and your service will have gone through extensive testing to ensure it won't be exploited. Otherwise 50k is peanuts like someone said when it comes to covering any financial loss incurred if your service is messed up. So that 50k is just to filter out a huge majority of individuals wanting to create something for themselves.
Even when offered a more competitive option, consumers love credit cards - the merchant gets soaked, while they get cash back. Given how the networks are, you'd have to have an unprecedented collusion of merchants to break the credit networks open.
Credit cards also have really good consumer protection laws around them. I have 30 days to report any fraudulent transactions and on my card and the bank MUST give me my money back.
> consumers love credit cards - the merchant gets soaked, while they get cash back
It's never the merchant that gets hosed. It's the people not using credit cards.
Because, of course, the merchant just takes his banking expenses and forwards them right back to all customers by increasing prices across the board.
And it's not only the people not using credit cards that get hosed. Even the people with credit cards lose out - because the cash back is practically always smaller than the fee the merchant payed and forwarded to the customer.
As always, the real winner is only the bank. There's a reason for the market cap of MasterCard and Visa...
> Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
If FedNow can fit in with ApplePay, then it can displace credit cards in the first place! The corollary I’m drawing, is from India where “UPI” payments (something similar to FedNow) was launched about 7 years ago and today is the more dominant payment mode than credit cards.
> Wish we could do the same for the credit card companies.
FedNow can replace credit cards for cases where chargeback or actual credit isn't necessary. So for many ordinary cashless payments.
Arguably even for many cases (small to medium amounts of money) where the possibility of chargeback seems useful FedNow could be better in expectation, because the fees are lower. The credit card companies are making money after all. Using them for chargeback is like buying insurance for things you can replace out of pocket: On average, you make a loss.
> This would cut alot of middle companies out of the payments industry (or at least put pressure on lowering fees). That would be a huge win.
> Wish we could do the same for the credit card companies.
I have no idea about fednow but you can directly transfer an unlimited amount of USDC to someone in about a second for $0.0025 right now on Solana.
The press release lists a few big banks like Chase, Wells Fargo, BNY Mellon, US Bank and Fiserv, along with a dog's breakfast of random service providers and credit unions.
Since free realtime payments presumably would still require both the sender and the receiver to use a participating financial institution, instead of all participants just transacting directly through the Fed, how is this supposed to work if most of the industry isn't participating?
It takes time for adoption. These were the early adopters, who wanted to participate in the design and also be prepared from a business standpoint to ready at launch. If it proves it’s worth, broader adoption will follow. Like anything else.
There are already other options for instant payments in the US. The Zelle network and The Clearings House's RTP have been running for several years, and provide pretty good account reachability today. FedNow is the result of smaller banks and credit unions wanting an alternative to Zelle and RTP which are both owned by consortiums of the big banks. The expectation in the industry is that there will eventually be interoperability between these systems, and it will not make much difference to consumers which one their bank uses. Similar to how paper check and ACH clearing works in the US today.
Zelle isn't a good comparison because it's not made for things like paying employees or other businesses. It was made specifically for payments between individuals and in fact, the big banks that run Zelle could very well change the terms to specifically forbid using it for things like payroll (actually, they might already forbid it but I'm not sure).
FedNow is good for basically everything: Payments between individuals, employeers/employees, B2B, etc. More importantly, the fees are so low it might as well be considered free ($0.045/transfer) which is HUGE.
> The expectation in the industry is that there will eventually be interoperability between these systems
Why? Why would the companies presumably making good money with Zelle interoperate with something that's stealing their customers? It seems like there's no advantage for the entity running Zelle to allow interoperability, and there might even be ToS language preventing any bank or credit union currently in Zelle from so much as moving towards FedNow.
the entire reason FedNow exists is because (simplifying somewhat) the large banks launched their own real-time payments system (RTP through the Clearing House) and small banks in the US lobbied the govt HARD to get a government option out of the reasonable concern they would get squeezed by the majors.
nearly all banks in the US should support FedNow within the next few years, if not much sooner, as it is seen as tablestakes for most bankers.
Yes, that part is unfortunate. It requires full routing number and account number. Maybe the phone number to account number mapping might be seen as a privacy risk in USA.
> “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash.”
What people are accusing them of is taking steps toward creating a digital dollar. This is their response, which is pretty mealy-mouthed if it's meant to address those accusations. A better way to express a denial would be "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project," if indeed that is true.
Because if they DO create one in the near future, then this product SHOULD be designed as a step toward that. If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
I actually don't have a strong opinion about the digital dollar. I learned about it as a concrete idea in this very article. My opinion is: sounds reasonable, probably pretty complicated to pull off. I am opinionated when it comes to bad, weasely non-answers to questions though, if that's what you mean.
If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
The characterization of the Federal Reserve as incompetent is the strong opinion I observed. I personally don't agree with the logic you communicated. I think a completely separate CBDC project that is separate from FedNow is perfectly appropriate.
IMO, many policy makers view FedNow as a better ACH.
Whereas, CBDC is a much more controversial project for some policymakers.
Separating the two projects offers some risk mitigation and ensures we will at least have something usable (1) in the short to medium term and (2) even if CBDC is mired in political non-consensus.
That's a reasonable response. I was being hyperbolic I suppose. What I meant was: if they are working on FedNow and a digital dollar at the same time, a more efficient use of resources would be to plan for FedNow to be interopable with the digital dollar, so that they don't have to replace it with something that is in a few years.
Perhaps they are planning for that already. My main complaint is the lack of both transparency and clarity in the quoted statement. I don't believe their response will satisfy anybody who is wondering if the Fed is working on a digital dollar, when it would have been very easy for them to do that. I sort of expect that kind of needle-threading response from private companies and individuals, but (naively) expect more transparency from public institutions.
Consider "We have every intent of creating a digital dollar and are actively planning and working on that project BUT FedNow has NOTHING to do with that project".
I don't understand why FedNow and CBDC are such a big issue in the US. FedNow looks quite attractive from a fees perspective, especially when compared to PayPal and alike. Part of me wonders if the middlemen who stand to lose out might be trying to muddy the waters. It wouldn't be the first time.
The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing. Same for importing drugs from other countries. And on and on.
The ISP duopoly/monopoly is worse from a consumer perspective and functionally equivalent from a civil rights perspective. To think otherwise is naive.
In fact, the private sector solution is perhaps even worse from a civil rights perspective.
Consider a prosecutor in Jurisdiction A hell-bent on violating the civil rights of a citizen in Jurisdiction B, and suppose Jurisdiction B is sympathetic to this citizen. This isn't even hypothetical in the USA. Abortion, immigration, civil disobedience, etc. In the corporate duopoly setup, Jurisdiction A can compel the ISP to comply -- either by physically entering the property of the ISP and taking data by force, or by threatening market access. In the muni ISP case, Jurisdiction B says "shove it".
And that's before noting that corporations such as modern ISPs are -- like governments -- also large bureaucracies endowed with incredible power that are de facto impossible to opt out of. Except at least in representative government you have some sort of voice, however small, which isn't dependent on amassing vast sums of cash.
> The same thing happens when a town decides to string fiber on their utility poles and sell transit. All sorts of reasons why that's a terrible thing.
Honestly, if governments paid out all social benefits in a demurrage currency which they accept for tax payments, they would save a lot of money because the velocity and therefore fiscal multiplier of a demurrage currency is very high.
Your employer doesn't pay you in food stamps, they pay you in money you can use to buy anything you need in the entire world.
The government provides coupons that allow you to buy food which is remediated to the seller in dollars. The authority and funding to provide that service is something that voters can impact or change.
These are very different things, not "that already exists" at all.
> they pay you in money you can use to buy anything you need in the entire world.
This is an primarily American phenomenon though and it's only really true because of the dominance of the US and US petrodollars over global society. It's probably not easy to spend Turkish lira in Madagascar, for example. Yes there are banks which will exchange approved currencies, but that's one step removed from being paid in a global global currency as you imply.
"Petrodollars" are completely unimportant. They just mean Saudi Arabia's financial reserves, and KSA is not a large country so it wouldn't matter if they abandoned the dollar. It already doesn't matter that we stopped Russia from trading in dollars.
If anyone ever mentions petrodollars, CBDC, or crypto to you, they are crazy and I recommend stealing their wallet. (Since they're into crypto they're used to it.)
The populist right's obsession with currency -- pointing fingers at state banks and currency systems and money lenders and so on -- is a product of their unwillingness to point fingers at real corporate sources of power & control in the world. In large part because they're sympathetic to them (or outright funded by them in some cases.)
At best this kind of stuff is a harmless ideological pressure release valve for a discontented middle class / small business / entrepreneurial layer squeezed from above (esp after COVID). At worst it veers into outright authoritarian & xenophobic politics and often blends in some anti-Semitism. Starts with rants about Bretton-Woods and the next thing you know you're hearing about the Rothschilds.
There was a whole wing of this stuff ascendant in the 1930s (in western Canada we had "Social Credit", for example) whose ideological purpose was to displace left wing populism and anti-capitalist politics with an explicitly pro-capitalist highly social conservative narrative which pinned blame for problems on "international banking" and, ultimately, Jewish people.
The latest flavour is obsessed with talk about "petrodollars" and cryptocurrency, and then you scratch a little and there's the face of Sergei Lavrov or Marie Le Pen hiding under the paint.
The world is f*cked and unjust but not for the reasons that these people go on about.
Shows where my brain was at yesterday - that was a pretty ill-formed comment. I regret including the term without a fuller understanding of what I was saying, however I reject the notion of being associated with racist populism for making a criticism of the oil-based economy.
That's fair, I was more riffing on parent's comment, buzzed on early morning coffee. Not calling you a fascist.
I do agree that the bulk of the foundation of the world's economy is constructed over the petroleum economy. Though I also don't think the nature of power in the world would change significantly if that were to be replaced with something else or if the nationality of the currency it is traded in were to change.
Remember the US is an oil exporter now. Most of this oil analysis stuff is leftover from the 2000s; it's also coming from overly materialist analysis of the Iraq War, where they assumed "this war is for Iraq oil" instead of the real answer which is literally "we invaded Iraq because we felt like it".
I mean if we're talking that level of societal breakdown they would just use the system we already have for tracking semi-restricted purchases which is scanning and reporting your government ID.
Then you can enforce meat and fossil fuel rations with no way to buy yourself around it.
Look at what happened with the Canadian protests and banking restrictions.
Many are concerned that cdbc will allow the gov to create carbon rations that are enforced by disallowing purchases. Cash is fungible while regulated digital currency isn't.
But how could something like a carbon ration possibly be implemented? They'd have to retrofit every PoS system in the nation to classify sales and tag payments with that information. This would already be possible using the existing settlement infrastructure, nothing unique to how a CBDC would work.
Plus, if the goal is to limit carbon emissioms, it's more of a liberal market-shaping attitude that mainstream economists have to simply tax carbon heavy activities rather than invent new and unpopular technological measures to force it to happen. Same applies to the fears about limiting meat consumption, etc.
Something along the lines of ‘We face a climate emergency that is even more serious than the Covid emergency, we have to do this, this is about saving lives’?
(I’m not in any way a climate denier, just a huge pessimist when it comes to attempted solutions)
You are already starting to pigeonhole people with your stereotype. I'm as liberal as they come and I find the thought of a CBDC to be an unimaginable Orwellian nightmare. A boot stamping on the face of civil liberties and privacy forever.
Maybe if our democracy wasn't broken this wouldn't be an issue. The government is supposed to be ran by us, but it's been taken over by bureaucrat cosmopolitans & multi-national corps who have a distinct will to power.
What benefit would targeting low wealth individuals have to the IRS? I worked on a state tax system briefly at Accenture and they offered the product for a percentage of reclaimed taxes. They started with high debts with good credit scores. Since they had skin in the game (which it could be argued the IRS doesn’t), they wanted to maximize the unpaid taxes they collected.
Because wealthier people have more complicated returns and are much more likely to litigate, resulting in more time commitment.
For high net wealth audits, you could have potentially dozens of people working on it for years so there is a possibility that a judge / jury rules in your favor.
They are going after low effort people, but making it up by volume.
Because it's easy to mess up claiming the EITC and only low income people can claim it. Also, there's a lot more (relatively) low income people than high income people.
This also depends if by "audits" you include every kind of correction letter the IRS sends you.
I got a letter from the IRS today and thought it was some kind of ironic punishment for commenting this, but it turned out it was just warning me I'd used the website last week(??)
IRS auditing targeting has been at the explicit behest of Republican controlled Congresses. That is, they were told to stop/reduce targetting high net worth individuals, or face even further cuts to their budget.
I can buy an icecream anywhere in the world without anybody tracking me. Even with the "wrong" political opinion (even if I would be a trucker in Canada during certain protests).
I cannot do that with CBDC.
No. CBDC (aka: the ultimate totalitarian's dream) is not the same as the current banking system, despite the current banking system also being very horrible for privacy.
* All of the above assuming that cash will be banned and CBDC will be mandatory for everybody.
Not as load bearing when you look at the legal limits of cash transactions in countries in Europe. Also not so load bearing when you consider the unconstitutional civil asset forfeiture of the current US.
> I can buy an icecream anywhere in the world without anybody tracking me.
No you can't. Companies like OpenEye and Deep Sentinel offer facial recognition solutions that are targeted at loss-prevention, and these systems are commonplace in the USA. Facial recognition-based consumer analytics systems are also available.
In fact, I think you'd be hard pressed to find a pint of ice cream that you can buy without having a camera pointed at your face. Even the little stand at the beach in the state park near my old place had a camera, and I didn't even have real LTE coverage there.
Privacy comes only from the force of law; not the other way around.
Anyways, the whole conversation is a red herring. This is a replacement for ACH, which already exists, and there isn't substantively more information sharing between banks and governments than already exists.
FedNow doesn't allow any more or less tracking than what's already possible through the Fed's visibility into ACH. So for the purposes of FedNow the entire conversation is off-topic.
Anyways, you missed the point.
The anti-new-technology and anti-gov-technology response to privacy and control is misguided. Corporations will fuck you, left unchecked, and governments will fuck you through corporations. There is no technical solution to political problems, and physical cash vs FedNow vs digital currency is a suite of technical solutions.
Trying to solve a political problem by eliminating technology is literally the same thing as trying to solve political problems with technology. The fallacy is in focusing on technology where the actual problem is political.
The problem is political and needs to be treated as such. The solution is building and maintaining political consensus in favor of strong privacy and personal property rights, not carrying around a billfold full of physical cash.
The reality is, supermajority (including me) of people prefer not using cash. Especially up here in the North.
Can’t even recall to ever pulling some out other than some casino entertainment night. I understand all the “freedom” (or whatever one might call it) I’m losing, but the positive sides are much better (never have to care about losing my wallet, much faster transactions, convenience and etc.). Sure, sounds bad on paper, but I haven’t felt any negatives in 10+ years, especially when in practice makes my life easier.
>The reality is, supermajority (including me) of people prefer not using cash. Especially up here in the North.
Unfortunately, in my experience, I'd have to agree with you on that. But it also brings to mind a relevant Samuel Adams quote:
“If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen.”
This is the difference between the government needing a search warrant and having to come to your house, and them needing a search warrant but a law enforcement officer already living in your house. Sure, they still "need a warrant", but that doesn't make the situation acceptable.
Do you think private unregulated businesses (CashApp, Venmo, etc.) that this is trying to replace are any better? These companies just sell your transaction data to the highest bidder, no warrant needed.
But these companies don't have a legal monopoly on force. It's in my best interest, if I have to deal with both these problems, to keep them separated.
Are you under the impression that ACH, the thing FedNow is replacing, is free from government influence?
This is what's bizarre to me about the FedNow hysteria. It's not a government system replacing a private market system. It's a government system replacing an older, worse government system. It's like having a panic attack because the Federal Reserve is updating their PCs to from Windows XP to Windows 10.
To be fair only about half of US ACH traffic flows through the Fed (the other half goes through the Clearing House Payments Company), but the Fed is very much involved (and a critical component of) the ACH network, even if the system is not explicitly a government one.
Ignoring the fact that FedNow doesn't change much in this regard...
I'm torn on this. Visa, MasterCard, Venmo (aka PayPal), etc. all know about large subsets of my transactions, and they go and sell my personal data to other companies in sleazy ways to cover their costs.
Is that better or worse than the government knowing all this stuff? Sure, the government can also legally use force against me and deprive me of my freedom and possessions, and might pervert my transaction history into justifying doing bad things to me. But that's a risk, not a certainty. Private companies selling my data and using it in nefarious ways is a certainty.
It's not about KNOWING, it's about CONTROLLING. The concern is they can shut off your ability to make transactions if you don't cooperate with whatever their agenda is at any given moment, like what the truckers in Canada protesting vax mandates experienced.
in effect the requirement to file these activity reports leads to banks simply requesting a lot of data from clients (contracts, trading data, invoices), and if you can't convince them, they'll eventually close your account. so you go to a different bank. their compliance department eventually also starts asking questions, and so on.
the freezing of accounts related to the "Freedom Convoy" is quite different, as it was an exercise of emergency powers. the Trudeau admin could have ordered gas stations to not sell fuel to them, or Visa/MasterCard to not process certain cards, or anything similarly extraordinary.
We can stop private companies from selling that data if we wanted to. Once the federal government has direct control of our financial transactions, how do we limit what they can do with that power?
The point of keeping the government out of the banking business would be to keep the door cracked for the chance to improve it later. That door slams shut once the federal government has the insights into every transaction, and more importantly the ability to deny ones they don't want us to do. We also Wil have much less control over the creation of a social credit score, theoretically the government would have everything it needs to make that happen with control over our transactions.
Seems to me people is failing to understand what CBDCs will bring, especially even more “bad money” and economic slavery caused by “incentives” to spend.
Please explain to me what FedNow changes compared to the current ACH system in regards to government recording of transactions? Please explain to me how FedNow prevents cash transactions from occurring, or otherwise justify your statement “every financial transaction I make”?
Many of the arguments revolve around concerns that the government will gain too much control, power, and personal information. It the government directly controls financial transactions they know every transaction we make, and more importantly can deny transactions they don't like.
Arguably the US government effectively has these powers today, but beingtthat they don't directly own our banks there is a level of red tape they have to go through. As long as they are technically separate there is also the opportunity for us to change the laws and strip them of that access, once combined we give up that possibility.
The US was originally design with a very strong distrust of our own federal government. For the last 80 years we've completely flipped the script and given more and more power to a massive federal government, but the undertone of distrust is still around for quite a few Americans.
How can a consumer actually try this to send money? This says Wells Fargo is live now but after logging into Wells Fargo I don't see any obvious new feature.
Think of it more as an alternative method to fulfill the kinds of things that ACH and Wire Transfers are used for. You'll probably never see 'this is a fednow function' on any consumer facing documentation, but billpay, payroll etc will use it.
I'm assuming that banks and payment services will add it to their services. Everything that goes over ACH will gradually switch to FedNow. There will be no noticeable difference to users except that transfer will be instantaneous instead of taking days.
It is live on star one credit Unions mobile app. On their interface, it still requires you to specify the target’s routing and ac number like an ACH transaction. So not the most usable now.
The network limit is $500,000 per transaction, although individual participants can set specific lower limit, which is defaulted to $100,000.
Furthermore any end user interface provided by the bank could have its own limit, since FedNow is just a backend service, frontends are up to each participating provider.
Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.
Regarding payment systems specifically, people generally don't realize what they're missing.
Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
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).
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.
Can you clarify something? I thought FedNow was for settling up when I, as an ABC Credit Union customer, initiate a transfer of $5000 to you, a Chase customer. Now ABC needs to subtract it from my account, and if successful, tell the Fed to take money out of ABC's Fed account and put it into Chase's, and to tell Chase to expect $5000 (Transaction ID: XXXX?) and here's who it's for.
Does FedNow, or whatever batch job it is replacing, involve ABC telling FedNow "This is for a transfer from Jane Doe (SSN 123-45-6789) to Joe Bloggs (SSN 098-76-5432)"? As I imagined it, FedNow would only need to know what bank is sending and what is receiving.
You should do some research on the Automated Clearing House (ACH) system. It's how most bank transfers are done. Most ACH transactions will likely move over to FedNow as it's implemented. I believe both systems do account to account transfer, fed now is just faster and settled instantly, while ACH takes a couple days to settle.
> Most ACH transactions will likely move over to FedNow as it's implemented... fed now is just faster and settled instantly, while ACH takes a couple days to settle.
FedNow is more of an extension to ACH than a replacement for it.
Same-day ACH also exists, although it's relatively new. FedNow is faster than same-day ACH though.
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.
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.
We're not a banana republic and actually have laws governing what the central back can do, and they can't block transfers without a warrant. Any private banking solution would be subject to same kind of laws.
Banks use Bank Secrecy Act as a cover to debank people. When you complain, banks retort that you agreed to their terms and conditions. Add machine learning and/AI to this mix: debank people because their algorithms flagged them as risky. Just as c-level executives use code language to talk to their yes-men to execute unethical and/or illegal activities. Now replace yes-men and code-language, with maching learning/AI; viola, perfect way to debank without any evidence of unethical doings.
When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so. They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you. It was very convenient. On the downside, the ATMs were turned off (!) during national holidays, so you had to get cash beforehand.
> They also had a system where you would put your checkbook into the teller machine and it would print your credits and debits into the book for you.
That's intresting to know.
Where I'm at, we had (still have?) a "passbook", a small booklet where you could get all your transactions printed onto.
But AFAIK we couldn't do it ourselves through the teller machine though. Once in a few months or so you go to the respective bank and ask the staff there to update the passbook. They use a machine, however.
Of course, there days it's unnecessary as you can electronically download a list of your transactions for a given period from the bank's website/app.
It depends. I have to use checks to pay my landscaper and housekeeper, because there isn't another unilateral payment document.
By this I mean, in the US everyone could use CashApp, Venmo, PayPal, Zelle (glorified ACH, right?), etc. for p2p payment. If you have the same bank, many banks have a trivial "send money to another customer's account" feature. However, to do so requires essentially a 'handshake' where the two parties agree on a method. Checks require no up-front handshake, since everyone knows what to do with a check (deposit it at your ATM, take a picture of it with mobile app, or take it to a check-cashing place or the issuing bank).
If I could print on paper a key or QR code that allows you to claim the money into the account of your choice, like a check does, I'd use that. Sadly, banks seem to have put their effort into Zelle instead.
Large checks are cheaper to handle than an equivalent amount of cash. Most people won't just toss $10k in the back of their car and drive to the bank, but would think nothing of taking a $10k check to the bank.
Also, there is less of a need for a receipt when paying by check. If I pay someone by check, my bank has a record of it. If I pay them by cash, I better get (and keep) that receipt in the case of a later non-payment dispute.
I gather check verifications have gotten better. I had to buy a new car last year and my deposit was via CC but, for the final payment, they were fine with a personal check whereas I've always had to pay with a cashier's check from the bank in the past.
Yeah. And with online banking apps, it's basically not worth anyone's time to do the handshake because depositing just isn't a big deal [ADDED: If there's an in-person transaction]. I use credit/debit/ACH 95%+ of the time but if that's not an option check is easy.
Zelle may still allow for you to send money to a non-Zelle account - as a dark pattern, they'll hold that cash for the recipient and give them an opportunity to sign up and receive it. This was a big pressure point for smaller banks and CUs to sign up.
Sure, so will all the real fintech payment companies that came before Zelle too, but you can’t count on someone to be interested in signing up. They might just say “no, screw that, I don’t like Zelle/PayPal/CashApp, I demand you pay me I with cash or check or I won’t work for you anymore.”
For all I know, they might even be banned from that app, and unable to sign up to retrieve my payment.
I mean, all you need for Zelle to send someone money is an id, if they have a Zelle-supported bank account. Which is effectively the same situation as bank transfer payments in other countries.
I run into this myself a whole lot with various home service businesses in particular.
It’s not unusual for me to get an invoice for a company via QuickBooks Online, with cash or check as the only payment options.
Other businesses around here have started giving discounts for paying with cash or check versus apps or credit/debit cards, to avoid the recent increases in fees.
I’ll also write checks when having a “hard” traceable payment instrument physically makes sense for auditing purposes or fraud prevention, although that’s less frequently needed.
I'm only nominally a grown-up, but I've lived in the US my entire life and I don't think I write a check more than once a year. Most stuff I buy is done with credit cards (which I generally pay with their respective mobile apps with bank transfers), my mortgage is automatically withdrawn from my checking account, and I use CashApp or Paypal to send money to people directly.
I think the last time I actually wrote a physical check was when I refinanced my house in 2021.
> When I lived in Japan twenty years ago, everybody just wired money electronically and checks were long obsolete. In the US, I write checks every week or so.
And yet in Japan they're still obsessed with using backwards fax machines and paper.
I don't think cheques are obsolete in Japan, so much as never having been popular and established in the first place. A lot of things are just done in cash (even e.g. buying houses!) and that's not seen as unacceptably risky the way it is in many countries; COD is an established practice that again just doesn't exist (and wouldn't remotely be considered safe) elsewhere. Furikomi is slow and expensive and cheques would actually be an upgrade in many ways.
Checks never took off in Japan because their 1947 Labor Standards Act (Art. 24) actually made it illegal to pay wages by check [1]. So it's not that checks were made obsolete, it's that they were smothered in their crib. Until the advent of electronic payment, it's said that tens of millions still got paid in cash rather than bank transfer in the early 90s [2].
I think it's easy to forget that societies that adopt a technology early might be doing so because the slightly outdated alternative from elsewhere was never brought over. Japan has no shortage of those, like a lot of dining is still cash only. Who knows, perhaps in 10 years those restaurants will skip credit cards and contactless and go straight to face-based automatic payment.
> Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
This is like comparing candles and lightbulbs. Sure you can light up your home using both methods just fine, but you end up realizing how inconvenient candles were once you've made the jump to the newer technology.
Yes, but in many cases the people using candles fight like hell to insist that electric bulbs aren't better, can't be better, and even if they were better, there's no way to have electricity in the US.
I don't think anyone is arguing that an automagical system of electronic payments that everyone uses wouldn't be desirable [so long as cash wasn't also an option] but writing/depositing a check now and then is so far down my list of weekly annoyances it doesn't even register especially given my bank actually "writes" most of them based on online payment instructions. I'd be much more annoyed if I had to use cash on a regular basis as is the case in some countries.
When I want to know what the future of money transfers could look like, I'd ask people from, say the Swahili-speaking regions of Africa, not Silicon Valley.
>Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
As an American, this definitely isn't true for me. I've found so many large organizations fail to make auto-pay work, transferring money is mind-bogglingly slow, and going from magnet to chip-and-pin instead of straight to tap-and-go was a regression. Some companies are able to bill you after you no longer wish them to bill you, while other organizations make it difficult to find out how much you even owe them in the first place when you want to pay them. Not sure how much the last couple can be solved with incremental tech.
I could see that. "Anybody from any country" could have included the US or meant "any other country."
But if it did include the US, it would have the assumption that Americans are unaware how terrible our payment systems are (generally untrue I think) or unaware that other countries have better systems (may or may not be generally true).
> Funny thing about topics like this is that people of any given country is oblivious to how other countries have solved that problem, or the challenges other countries face, or inturn the problems that they themselves face.
I thought FedNow was explicitly inspired by the success of India's UPI?
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[ 1.9 ms ] story [ 439 ms ] threadWhoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
Can you go into more detail here on what you think will change from the status quo? Existing bank transfers are obviously not secret from the government on request. While the government doesn't have direct access to run search heuristics on the whole dataset they just delegate that to the banks' internal compliance team.
Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
*Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
If the federal government wants to tax things they indeed can. But I was asking about a chance from the status quo.
If you owe the US government money right now they can take it out of your bank account.
> Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government.
You can shop around for a different bank but it will still follow US law and also go above and beyond to help out the feds.
> Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
Yes, but this already exists. https://ofac.treasury.gov/specially-designated-nationals-and...
> *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
> If you owe the US government money right now they can take it out of your bank account.
Yes, but they can't see your transactions unless they go ask your bank. Now, they could do that, but they're not set up to do this for all transactions. FedNow changes that for all transactions within FedNow. The government wouldn't start taxing transactions until FedNow is the only game in town or all other payment systems also give them that kind of visibility.
As well, with FedNow they get real-time transaction visibility, which is very different from getting non-real-time batched transaction data from banks.
> Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
This is a very good point.
....Or they can just demand banks immediately start taxing transactions per merchant codes _right now_ without FedNow. And the banks would comply. They don't need real time visibility. The bank could take money off the top and/or send the tax form required to you at the end of year and IRS just like anything else. It would just be similar to Form 8949.
The Federal Reserve isn't the government. Yes, if they want to charge a fee for this service, they could. The same is true of every existing money-moving mechanism.
> Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government
FedNow is essentially free[0]. If FedNow imposes a higher fee in the future, you can always choose to use other services (ACH, wire payments, etc.). It's a competitive market.
> Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you.
This power already exists. FedNow doesn't change it one way or the other.
[0] https://www.frbservices.org/news/press-releases/012722-fedno...
They have no authority to do this unless you're subject to a tax witholding order. The government cannot collect taxes on arbitrary transactions as they occur - it can levy taxes, and then attempt to collect them (it hopes via voluntary payment by taxpayers).
You, like so many other commenters here, seem to fail to grasp that FedNow is a replacement for ACH, the existing inter-bank exchange system that already involves the Federal Reserve to precisely the same extent that ACH already does.
the implied alternative being they don't take it automatically and now it's your responsibility to figure it out and pay it? Or is the alternative that you would not pay it if it were not automatic, aka tax fraud?
I would be interested in if anyone can give a example where the friction increases in such a way as a person would experience an actual difference, or how this would actually make cash easier.
Otherwise this sounds to me like the endless silly arguments against a national id card by people. (State ID cards that then go into a federal database are no more private but come with annoying downsides like ID.me)
Currently, it would be more difficult to build this database as it's hodgepodged together from suspicious activity reports and subpoenas. There's of course the unknowable possibility that law enforcement and security agencies have secret ways of building a comprehensive realtime dataset - but, if they do exist, their secret nature reduces the scope of situations in which they can be used.
That's on top of reporting requirements banks already have for your transactions.
Question is, why does this fact get brought up everytime as if it’s novel?
https://www.inc.com/tess-townsend/venmo-reportedly-blocking-...
https://angelinatravels.boardingarea.com/2017/05/04/careful-...
I tested one of these and had to send Venmo customer support an email explaining I was not a terrorist.
The government would still need to go out of their way to know about that transaction. And the liability would only come after you or the organization got in trouble for something else.
> Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
No, exactly wrong. It's a gov Blockchain
No. A possible CBDC rails in the US is nothing to get excited about. Unless you want savings limits and expiry dates on your money.
> Is this akin to government-backed Venmo, or something?
Yes, but even worse.
I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well.
This is particularly relevant with debt brakes. A country with a debt brake but without a savings brake is going to run into a pretty fundamental limitation.
Savers can delay their spending decisions and this ultimately delays the ability to repay debts but since debtor's are at the mercy of lenders, we blame the debtor for the lenders tardiness.
[1] https://en.m.wikipedia.org/wiki/Money_multiplier
Do you mind clarifying? I agree banks create new money, but they do that by lending out existing deposits. A bank can’t lend out money that don’t have on their books…
This Bank of England paper is by far the simplest and best explanation of the whole process, well worth a look even if just for the summary on the first page :)
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
I get what you’re saying in theory, but show me a bank with 0 capital…
Once you stop thinking of money in terms of tokens and bank deposits as those tokens getting stored in individual buckets - or there being any buckets at all - you can think of it in terms of assets and liabilities it makes sense. Also that commercial bank money (deposits) and central bank money (cash) are different because they are liabilities to different entities - commercial banks and the FED respectively.
Or more fundamentally, modern money is just I-O-Us being moved around.
https://cepr.org/voxeu/columns/banks-do-not-create-money-out...
https://www.federalreserve.gov/econres/feds/money-reserves-a...
I’m still missing how this negates the money multiplier though. If banks are subject to reserve requirements, doesn’t the money multiplier still give a reasonable upper bound for the amount of money that can be created?
Why is this something that's not already possible under the current settlement regime and is uniquely possible and likely to happen with a CBDC?
> Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?
No, under the hood it's a government Blockchain
* Any IBAN from a SEPA country, at least.
My mid-sized Italian bank has a promotion right now to make instant payments with only 1 € in fees (instead of the usual 7 they charge, or 0 for "normal" bank transfers settled overnight).
I think you should reconsider your stance.
The amount of people rooting for big brother here on HN lately is frankly terrifying.
As convenient as Apple Pay is, I would not vote for a cashless system. I am just confused that very specific ideas of how this hypothetical system is going to work and am not sure where these come from or why it has to work the way people say and not in a more accountable less abusive manner. Expiring money seems patently absurd so why a central bank would consider it seems so outlandish to me at least.
Some countries, like Costa Rica, do this with cash, but with a much longer timeframe. Every 10 years or so they launch new banknote designs, and the old ones are gradually removed from circulation, until can only be exchanged at the banks and eventually lose their value by becoming "demonetized".
I just don't see how this is realistic. It is basically impossible to enforce.
If you know your money will expire you will spend it, thus stimulating the economy. We also can’t have the dirty proles save their way to a higher social class.
Eswar Prasad, WEF Annual Meeting of the New Champions, June 2023
The above has some chatter about non-US nations exploring the expiry/programmability aspects.
Also, nothing stops people from buying the goods in question by using a payment service provider/bank that provides a layer on top of the CDBC and automatically circulates the money for you behind the scenes to avoid the expiry.
> We also can’t have the dirty proles save their way to a higher social class.
I don't know what you mean by this. Rich people spend their money at a slower rate than poor people so the rich would be disproportionately impacted by this. Someone living paycheck to paycheck isn't going to have much money that can expire to begin with.
The idea isn't new.
https://en.m.wikipedia.org/wiki/Silvio_Gesell
This is different from a coupon that expires instantly. That is a terrible idea. Don't do this.
Also, the idea of demurrage currencies is to replace the devaluation via inflation with a nominal fee so it is possible that in countries with high inflation rates, the new currency would end up losing less value over time simply because it maintains price stability easily.
Edit: btw. His theory is dated in the sense that Keynes and Dieter Suhr have an updated interpretation. With a hint of Fisher Black you are going to get one of the most interesting economic theories that can explain most of the suffering in the world based on very few assumptions. The money and land reform policy proposals still remain relevant today.
Whilst many HNers were celebrating UPI as the payment rails from India, it is almost the same thing as FedNow and is planning to put their own CBDC on UPI called E-RUPI [3] taking all the same valid concerns that I have mentioned.
Do you really want this?
[0] https://www.pymnts.com/cbdc/2022/nigeria-cuts-atm-cash-withd...
[1] https://reclaimthenet.org/digital-euro-spending-saving-limit...
[2] https://bfsi.economictimes.indiatimes.com/news/policy/digita...
[3] https://indianexpress.com/article/explained/what-is-e-rupi-d...
A recent example of how this might be relevant is with the protests in Canada that lead to the freezing of the protesters’ bank accounts by the government. While I don’t agree with the protesters, the idea of the government freezing their accounts is alarming. After seeing such control exercised, it’s hard to be excited about a cashless society.
That is the most important concern. Not even crypto can beat cash for convenience and anonymity.
But having a way to transfer money outside of large corporations and instead through a government regulated service is a good thing.
The fed may have a small advantage you are willfully overlooking.
If we accept some minor inflation, then the fed is always setting the rate a bit too low rather than too high.
In other words. Whatever the Fed does, it is mostly irrelevant.
On the other hand, if there is actually some leeway and elasticity then monetary policy can actually result in increases in economic welfare. In this scenario we want to see some utilitarian meddling.
This isn't true. Private currencies exist(ed) and are afaik still legal.
The reason we put governments in charge of our money is that up until about a decade ago it was either the government or a corporation as a decentralizes currency was not really implementable. Do you want to get paid in amazon coins only redeemable on amazon? No, you do not.
>interest rate meddling by govt contractor federalreserve
You need to do that. Any currency needs some mechanism to control issuing. If not the government who else could do that?
For most of my life, those were ancient history or theoretical. Then in 2009, something changed.
And ever since then, I've seen nothing less than the most zealous propaganda campaign to undermine those... it's bizarre to watch it unfold. I keep side-eyeing everyone, wondering if I'm the only one that sees it. Sure, it doesn't help that the cryptocurrency people are whackjobs that might have screwed it all up without any outside help. But I guess they couldn't trusted to do that, so the help was provided.
Saying that it's "legal" doesn't change the fact that if someone were to come up with a private currency, gigantic forces, government and not, would be arrayed against them to put an end to it.
> Any currency needs some mechanism to control issuing. If not the government who else could do that?
I think the implication here is: who could be trusted to do it in a way that doesn't favor some at the expense of others?
Thousands of private currencies exist right now.
Nobody would care about your currency, since it is useless, and as such worthless. A centralized currency is an enormous social asset. Nobody wants private currencies.
>who could be trusted to do it in a way that doesn't favor some at the expense of others?
Just try to imagine a currency controlled by amazon. Do you think they won't do some hyperinflation making you poor once a decade?
The controller of a currency has enormous power. If the government can't handle it nobody can.
Do you think that the US government and the fed don't do this? You don't see it, of course, because they also report the numbers you use to decide if there is inflation.
And who says that it has to be controlled at all, in the sense that some singular entity controls it, rather than an algorithm?
> The controller of a currency has enormous power.
Yeh, and it's no less a problem when it's the government rather than Amazon.
> If the government can't handle it nobody can.
That's always been my point.
Inflation is an objective measure it is the price increase for a certain basket of goods. Yes, you can fake it to a certain extent, but this is true for everything.
>You don't see it, of course
What? That is totally false. Inflation is one of the easiest metrics to spot.
>And who says that it has to be controlled at all, in the sense that some singular entity controls it, rather than an algorithm?
Practicality. Either the algorithm is extremely simple (BTC) or you will ruin your economy.
>Yeh, and it's no less a problem when it's the government rather than Amazon.
Total nonsense.
You also have to be resilient to attacks on your currency and an algorithm gives your oppponent certainty on how you will react. You need human control at some point.
Money wasn’t always the sole dominion of government. There is a reason we’ve ended up at this point. I find it to be entirely reasonable.
Most money in the US already consists of electronic records in banks. Making bank transfers work better is fairly orthogonal to whether ATM’s work and retailers accept cash.
https://youtu.be/Qc7HmhrgTuQ
Apply some critical thinking on this. Governments and corporate elites worldwide are salivating over the level of surveillance and control that a CBDC will enable.
The federal government cutting off financial services for legal but disliked industries such as the gun industry (see the Obama admin's Operation Chokepoint).
The Canadian government freezing the bank accounts of those who supported the trucker protest.
Not directly related to finances or electronic surveillance, but some government fuckery greatest hits that actually happened:
- Kidnapping hobos and force feeding them LSD
- Intentionally infecting people (mostly black) with syphilis
- Feeding irradiated oatmeal to mentally handicapped children
- Obama personally ordering the execution of an American citizen without trial and having the military carry it out (and killing the target's 16-year old American citizen son as well)
Not revealed in the last 5 years.
> The federal government cutting off financial services for ...
Not revealed in the last 5 years. Was this subject of an actual conspiracy theory?
> The Canadian government freezing the bank accounts of those who supported the trucker protest.
At least this is within 5 years. I can't judge if this was an actual conspiracy theory or not ( I don't think so ).
> - Kidnapping hobos and force feeding them LSD
> - Intentionally infecting people (mostly black) with syphilis
> - Feeding irradiated oatmeal to mentally handicapped children
> - Obama personally ordering the execution of an American citizen ...
All of those AFAIK not revealed in the last 5 years.
Next thing you know somebody comes up with the moonlandings and JFK.
People who doubt the government and especially the fiat monetary system usually end up as "gold bugs", they start preparing for financial collapse by purchasing physical gold. Before the 2008 financial crisis, I was involved in gold circles online and everybody there knew a huge crisis was coming and they were buying as much gold as they could. Now, the price of physical gold (and many other commodities) are determined by the prices on the Comex futures exchange, which are under the control of an oligarchy of big banks.
During the financial crisis and the years after, most gold traders and gold bugs noticed that the gold price would drop every day about 09:00 on the New York Spot market, and everybody was talking about how the big banks were illicitly manipulating the gold price to try to keep it down. Of course this talk was dismissed by uninvolved as loony conspiracy theories, together with every other insulting and dismissing adjective that commenters here are so fond of.
But it turned out that the conspiracy was true, and in 2022 a couple of the bankers' fall guys were sentenced, and JP Morgan agreed to pay $920 million in fines[1]:
"The evidence at trial showed that between approximately May 2008 and August 2016, the defendants, along with other traders on the JPMorgan precious metals desk, engaged in a widespread spoofing, market manipulation, and fraud scheme. The defendants placed orders that they intended to cancel before execution in order to drive prices on orders they intended to execute on the opposite side of the market. The defendants engaged in thousands of deceptive trading sequences for gold, silver, platinum, and palladium futures contracts traded through the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc."
[1] https://www.justice.gov/opa/pr/former-jp-morgan-traders-conv...
The same things are going on all the time, sometimes the perpetrators are banking giants, sometimes the government or parts of government, sometimes tech giants, sometimes it's all of them together, sometimes other perpetrators.
#1 Don't bet more than you're willing to lose.
#2 The market can stay irrational longer than you can stay solvent.
These are widely known and I make no claims of originality. However, your story about gold market manipulation brings up a corollary to my #2 rule that I do take credit for: Never underestimate the extent to which governments and other vested interests will go to in order to keep markets irrational for as long as possible.
ACH and even check clearing are already largely performed by the Fed today!
Such as what?
>Apply some critical thinking on this. Governments and corporate elites worldwide are salivating over the level of surveillance and control that a CBDC will enable.
How is this any different from the current system? Your cash is 99% digital anyway with basically every transaction completely monitor-able to the Feds under the right circumstances. Don't see how this situation would change much.
https://www.federalreserve.gov/central-bank-digital-currency...
Real ID + needing it to browse anything on the Internet: https://community.qbix.com/t/the-coming-war-on-end-to-end-en...
From what I see people on HN writing, by and large they downplay the risks of these as well as AI. Or alternately seem to suggest that CBDCs and national IDs are not coming, and that it’s a conspiracy theory. However, the “enshittification of Big Tech platforms” is already a fact, so they simply complain about it, but anytime solutions involving open source, decentralization, and utility tokens are introduced, they are violently voted down. So — since no solutions are welcomed, I guess many denizens of HN support hurtling toward extreme centralized control. After all, we’ll be able to complain about it once it’s in place, and that’s enough!
Edit: literally 5 seconds after I posted it, I received downvotes. Not fast enough for a human to read the message let alone explore the links. I wonder if it’s even automated by keyword now.
Similarly with digital payments, I'd much rather trust the government with that than some rando cryptobro of the week.
There is nothing extreme about this. The government already does both functions in the analog world. It's about time they caught up digitally.
Meanwhile some YouTuber screeching about some Bible quote... not a convincing start
Edit: didn't downvote you btw, just don't agree that this is a bad thing
I can vote for Parliament I can't vote for PayPal's board of directors.
Taxes? So I get some roads and schools and parks and old people healthcare, and lose some to corruption. Better that than making Bezos and Zucky even richer.
1970, though I hope we aren't at risk of that happening again anytime soon. The modern military has been pretty good at staying apolitical.
Meanwhile the government protects many of my "freedoms" from private intrusions when it comes to things like bankruptcy protections, credit bureau limitations, telemarketing, angry gunowners, etc.
I've run into trouble with the law on a few occasions, but it was never terribly oppressive -- probably largely thanks to my race, class, and politics. If I were a poor Black man or a conservative white man, I'd probably have a very different view of government.
Thinking about it some more, I think think this just circles back to the old "freedom from" and "freedom to" debate... not sure that's worth getting too much into here, since we're unlikely to change anyone's minds or reveal new perspectives.
The government is authorized by it's own citizens to use force on some citizens (such as criminals).
That being said, your point might have been when did the government last use force in an unjust manner? That's a matter of constant political debate.
Most politicians back it, so voting differently makes little difference. Labour and the Conservatives support the Online Safety Bill, the Patriot Act was bipartisan, and voters have very little control over the EU and can’t stop Chat Control. And most of “government” isn’t directly elected: you can’t vote out the NSA, and Congress has little power over them either. The government blunts corporate abuses but doesn’t stop them: revolving doors ensure authorities target small fry while big companies like Visa keep going unimpeded. And finally, most voters don’t mind surveillance that much, since government and media manufacture consent for it. Don’t count on ordinary people to “vote it out” until it’s too late.
Lobbying against government surveillance helps marginally, but it's an eternal struggle. Governments take as much power as they can get, while abuses are exponentially harder to detect and stop than refusing to grant that power in the first place. The “slippery slope” isn’t a fallacy, it’s the record of the last twenty years. Don’t let them track speech and money with a central ID and digital currency, just because you don’t like a few tech bros or online trolls.
Ditching Google is not the same thing as removing Google from governance of your life, though. I don't use Google search, but I am sure they know who I am and sell that data to anyone who wants it, including government agencies which can't legally obtain that data on their own due (ostensibly) to citizen oversight.
However, the average person at least has some teeny tiny say in government via democratic processes and oversights. They have zero power against a big company unless they are a major shareholder.
The fundamental difference of "one person, one vote" and "one dollar, one vote" should not be lost in this discussion.
Big bureaucracies are terribly disempowering no matter who runs them, but in government at least you have some tiny amount of representation vs zero in the private sector.
While not an outright ban on religion per se, there is continued state pressure against religion: https://en.wikipedia.org/wiki/Antireligious_campaigns_of_the...
What makes this tradeoff (of convenience vs privacy) acceptable to me is not that I trust the government, but that I already accept I have near-zero privacy right now, as it is. Making it slightly easier for them isn't a big deal. I'm not a very exciting person to begin with.
And frankly I suspect that outside of techno-libertarian echo chambers, this is the case for most regular people. They just don't really care if the government knows about them. Not everyone has the same degree of desire/need for privacy.
In legal circles, for example, there's the refrain that you should never share unnecessary information with police, even if you're well intentioned and have nothing to hide, because innocence isn't a preclusion from being royally fucked in court. It's true that "the government" as a homogenous blob has mountains of information on you, but I guess I'm not so eager to dissolve what few helpful divisions within that blob exist.
On the whole though I agree that my information existing somewhere in that blob isn't the hugest deal.
This kind of already exists: https://login.gov
I have to use this to login to the VA.
And reintroduce all the chilling effects of knowing everything you say is on a permanent record linked to your name. I know the government wouldn't be running the sites, but they'd have activity metadata, and data breaches could be correlated to work out who the "opaque" ID refers to (perhaps it would be possible to mitigate that by having the IdP identify users to the site as a hash combining the site and the user. Not sure). There are a few types of companies that may have a genuine reason for requiring government auth, but generally we should not make it easy for Facebook or Google to require it
A community with fewer bots and trolls should be accomplished with moderation, and not just allowing a firehose of signups
Ideally, the government login/auth would be an opt-in for sites where anonymity isn't important. Facebook, for example, already has a real-name policy but still has fake accounts. Moderation alone isn't sufficient; it's hard to keep up with the number of bad actors. Limiting signups to verified humans, and possibly validating their nationality, can help with that IRT to bots and foreign agents.
It's important that the mechanism be opt-in, though, and yeah, metadata would be a problem. But realistically it's just a matter of degree... they already have access to all of that metadata today with just a subpoena or national security letter. Centralizing the login would make it easier for them to collect it, but also make it easier to audit via government mechanisms (FOIAs, etc.) compared to the opacity of private companies (which are under zero obligation to reveal how things are stored).
I would be 100% unwilling to engage with public online communities if I had to reveal my real-world identity to do so.
The hope is not that it would kill anonymity altogether, but that it would create some alternative communities linked to real-world identities, and maybe that would help people behave better, with real-world decorum, in those specific identities. Yeah, some people would never sign up for those... and maybe that's OK, as long as the remaining community is more civil and thoughtful?
I don't think that would be the result, really, because when sites do have real identity requirements, it doesn't increase civility much, if any.
I think it's the absence of a physical presence that makes people feel OK with being less civil. Emotionally, it doesn't feel like you're talking with real people.
But I don't know.
Why do you lie when it takes 1 second to verify the facts? I wasn't interested, but clicked on the video and the man is talking in a calm and collected manner, not even close to "screeching". Or is it always "screeching" when somebody says something you disagree with?
>Here we go. CBDCs are next, and also national Digital IDs
No, this is a long term replacement for ACH, a function that the Federal Reserve was already carrying out.
I'd love to read this, for anyone more familiar with the legislation/where to find it.
It's so weird to me that people are afraid of the government knowing who you are when like every private company asks for the same kind of information all the time, and data brokers gobble that up and resell it all the time (including to government), and nobody bats an eye.
Any citations on every trans person in the South being singled out for denial of services by the government? Because that sounds like inflammatory nonsense.
Additionally in living memory, many businesses and government services were segregated by race. In some cases some races were denied access to services or those services were severely underfunded. The legacy of that legal system still has impacts today.
[0]: https://www.usnews.com/news/best-states/articles/2023-03-30/... [1]: https://www.npr.org/2023/06/30/1182121291/colorado-supreme-c...
For children. Or for state funding, but the state doesn't pay for the vast majority of plastic surgery.
> Additionally in living memory, many businesses and government services were segregated by race.
Race doesn't need affirming medical care, or identification to single out. Also, businesses and government services weren't abstractly segregated by race, they were specifically discriminatory toward black people.
2. The example of racial segregation was to point out an additional time that a minority group was discriminated against. Black people getting less than adequate medical treatment is not them needing specific affirmative care and being denied it but an example of discrimination that was government sanctioned. Beyond pointing to the two sets of laws and their discriminatory natures the link is superficial, just another example of legal discrimination.
I cannot speak for you but denying the government the power to discriminate or oppress minorities and empowering the rights of individuals to life, liberty, and the pursuit of happiness is worthwhile to me. Which is why seeing all these states pass these discriminatory laws is disheartening.
Case in point, the no fly lists, they literally don't care if they just ban all the John Smiths.
There is no central database of:
* Citizenship
* Births
* Drivers Licenses
* Marriages
* Deaths (SSA death reporting is voluntary and customary by funeral homes -not required)
* Education history
* Criminal Records
* Firearm Ownership
* Property Ownership
* Vehicle Ownership
The only thing the feds or even the state government has a certain idea of is, how much you made in a given reporting period - not that reporting periods always overlap in any meaningful way. There is no requirement (as far as I can tell) to even request a social security number - most parents do, because they want to claim their children on their taxes.
Now, many of those records do exist - they exist at the county, state or local level in some manner or fashion - and of course, its not standardized either, sometimes its at the county, sometimes the state, sometimes at the county or state for the same record type based on year. (e.g. Marriages from 1902-1962 are in county records, and 1962 to current in state, or the other way around.)
Trying to link all of this data in a meaningful way, would be a monumental task that would likely require a vast amount of manual data matching - and it would still be wrong 40% of the time.
Not sure you need firearm / vehicle / education history for an ID system
That's already the case.
The secondary "national" IDs most of us use are simply state IDs or driver's licenses. They're not in a federal database, but I don't understand how that's meaningfully different. It's still a big government tracking system.
They used to carry a disclaimer: FOR SOCIAL SECURITY PURPOSES • NOT FOR IDENTIFICATION
Nobody has seriously discussed a CBDC for months in the U.S. FedNow is the American financial system catching up to the 1990s. It has nothing to do with crypto beyond the cursory.
I can't begin to parse your comment.
A CBDC would mean cutting out the bank - you would hold your money digitally with the Fed, and the Fed would be liable for it.
FedNow creates a ledger that allows two banks holding their money digitally with the Fed make an instant transfer. You never become a direct customer of the Fed, but your bank and the bank of the person you're exchanging money with - both already Fed customers - have a quicker way to record the transfer.
The only relation between FedNow and a CBDC is that the Fed is involved, and, like, computers, I guess? Other than that, their mechanisms and effects have very little in common.
It isn't being seriously discussed for implementation. The working groups are disbanded. The Fed won't write it off--they shouldn't. But CBDCs are as proximate as postal banking.
[0] https://en.wikipedia.org/wiki/Unified_Payments_Interface
> Because UPI is designed to be intermediated by computers rather than by humans, transactional information gets captured by the payments company while the transaction is in progress, and that can tell the clerk (or cron job) that the payment succeeded without them needing access to the bank account.
> This is a fun engineering challenge in many countries, which are often overlaying bank transfers as a payment method on top of bank transfers as a settlement method.
[…]
> Bank transfers are an extremely small percentage of customer-to-business payments in the U.S. In addition to the speed issue, which might get improved by FedNow when it launches (wags have referred to it as FedLater), bank payments have no consistent way to receive metadata, and despite being no-cost they compete with well-developed credit card ecosystems which credibly offer better-than-free pricing through rewards schemes (to the customer, who generally gets to choose which payment method they use to transact).
https://www.bitsaboutmoney.com/archive/bank-transfers-as-a-p...
Reward systems won’t last as merchants push towards FedNow as a payment alternative and charge you to use a credit card. Nor should they last.
https://news.ycombinator.com/item?id=36012866
> Walmart has observed a severe misalignment of incentives that has plagued the payments system in the United States for decades. Certain incumbents and large participants enjoy massive profits by stifling innovation in payments, ensuring that account access is limited to a small number of networks, and perpetuating barriers to entry for alternative solutions. Controlling this access allows the dominant players to extract rents from other payments system participants, ultimately resulting in higher costs for all consumers, particularly consumers who are unbanked or underbanked.
Or citi has figured out that certain users of the card carry a balance and they spend more on interest than it costs in Citi in rewards. If the situation changes and Citi is losing money, then they change the reward amount.
Discover does the same thing with quarterly promos. They are paying 5% for the first $1500 of Apple Pay/Google Pay transactions… an incentive to add Discover to your wallet.
Gas is also unique. Our local supermarket chain gives you gas discounts for spend. People are always annoyed about gas so they fixate on saving $1/gallon, forgetting that they spent $1000 at the most expensive grocery chain so they can save $12-20 for a fillup. That $12 probably cost them $50.
There are many ways to pay and they have different discount rates. Some places have a cash discount, for example.
As a "tax," this falls on people who don't shop around for whatever reason. Some of them are wealthy and can't be bothered to play this game. Others might not find playing the game feasible for other reasons.
Yet, India is already working on E-RUPI [0] which is a CBDC on top of UPI by the Reserve Bank of India, also shown in the same Wikipedia link you just used. Eventually, FedNow will just be the rails for a US dollar CBDC.
The next time a protest happens in India after their government does something extremely unpopular, you'll see why CBDCs are a nightmare not to be ignored. This is why governments around the world are working with many central banks with pilot schemes to test them out and eventually roll their own.
> Like a Zelle or Venmo, but government backed!
Look where that went for Zelle. [1] A vehicle for rampant fraud on the system.
[0] https://indianexpress.com/article/explained/what-is-e-rupi-d...
[1] https://www.nytimes.com/2022/03/06/business/payments-fraud-z...
This is unfounded. FedNow is a faster classical payment rail. CBDCs involve the central bank taking on a customer-facing role. The Fed has no desire, nor frankly basis in law, to do that. The only reason the two are linked is crypto (a) prompted the first serious discussion about American payments modernization and (b) promoters are using it as a thread by which to hang onto a dream of mainstream crypto.
FedNow is a long-term replacement of ACH, which the Fed Reserve banks already run. This system is open to all US financial entities. The platform also uses a ISO standard https://www.frbservices.org/financial-services/fednow/prepar...
https://www.wfla.com/8-on-your-side/better-call-behnken/zell...
Not sure if that denial makes much sense, although it certainly could take a long time to replace ACH even if it eventually does, simply due to how many systems interact over ACH, and that many of them will not be high priority to change.
I'm also a little surprised that FedNow went with real-time gross settlement, simply because that means posting every transaction to a Federal reserve account (which would be a large increase in transaction volume for those accounts, relative to say daily or even hourly net settlement). Reading Operating Circular No. 8 tells me that is exactly what they are doing, which is honestly a little impressive.
This eventually replaces checks, money orders, Zelle, Venmo, ACH, and probably credit card payment volume over time (as seen with UPI in India and PIX in Brazil). Every deposit account can send to other deposit accounts instantly.
Edit: (throttled, can’t reply) GSIPs (globally systemic important banks) like JPMC with multiple routing numbers are the exception, not the rule.
[1] https://www.gobankingrates.com/banking/banks/chase-routing-n...
That's all though. That's not a good reason to stay on FedACH.
For the HN crowd the best way to describe the difference between FedACH and FedNow is migrating from a batch-based system that settled transactions a few times/day to a real-time system. Just like such migrations developers and engineers encounter in many normal IT environments, real-time systems have their own issues but are also capable of so much more and are generally easier to improve/evolve.
FedACH was made for big, one-time transfers between bank accounts where it wouldn't matter too much if settlement took a few days. FedNow was made for lots of small(er) instantaneous transactions.
At first FedNow will likely be used as a simple replacement for ACH transfers but I suspect that it will eventually replace the back ends that handle debit card payments (because the prize--which would be taken from Visa, MasterCard, First Data, and similar--is too big to ignore).
In Switzerland we build an awesome eBill system ontop of the equivalent thing to FedNow. Its all run by Six Group which is the biggest Stock Exchange but it is jointly owned by the big banks and government. So they all agreed to add this eBilling system. Its so much superior to having paper come in the mail all the time.
So much is possible once you have instantly confirming transactions supported by all banks. Suppliers can assume all possible customers have a bank account that can do this in contrast to the crazy world of sending paper checks by mail.
Since decent online banks will let you save the details of recipients, in practice it is very smooth and uncomplicated.
You could also receive and send invoices by fax, and there's nothing wrong with that.
Sure, it works. But it's super slow and archaic. In the same way some people think people writing personal checks works, but others think its ridiculous.
There's nothing slow or archaic about that, at least I haven't noticed that after a few thousand invoices sent and received by e-mail. With modern banks you can even make batch payment of invoices by uploading a csv file.
Given Stripe's role in the system, it doesn't make sense for them to support it until there's sufficient support from the banks as well. Until banks support it, it doesn't matter if Stripe (or any payment platform) does, because the users won't see any benefit.
> Driving the news: "We're tracking it closely," President of Product and Business Will Gaybrick says, noting the company is not actively working on anything related to FedNow. "I really do think real-time payments are going to be a big deal."
> "As I understand FedNow, there isn't yet a mandate, so banks don't have to implement it," he added. "For things to completely change the landscape of payments, you need universal coverage."
> If, for instance, only 30% of banks support FedNow, then it's unlikely to become a priority for merchants to adopt the system.
https://www.axios.com/pro/fintech-deals/2023/06/14/fednow-st...
> The Financial Technology Association, which represents fintechs including Block, Marqeta, Stripe and Wise, among others, is urging the Fed to make direct access to the new faster payments system, called FedNow, more widely available so fintechs can tap the new service without going through banks.
> Generally, only licensed banks have access to the Fed’s master accounts, giving them clearance to use FedNow’s faster payments system when it’s available, but nonbank fintechs argue it’s shortsighted to exclude them from the same direct access to the new public system. While there is also The Clearing House’s rival RTP Network, the new FedNow system may provide more cost-effective services.
https://www.bankingdive.com/news/fintech-federal-reserve-pay...
I wish I, and anyone else, could get a bank account directly with the federal reserve bank.
> According to a 2021 report by the Federal Deposit Insurance Corporation (FDIC), an estimated 7.1 million adults in the United States do not have a bank account. This number represents about 2.4% of the adult population.
You could even place limits to "child-proof" such accounts. I'd be ok with not allowing the account balance to get below zero or exceed the FDIC insured limit. My only condition is nobody should be banned from it or kicked out for any reason. You could say this account earns no interest (as long as there are no account maintenance fees or transaction fees).
Wish we could do the same for the credit card companies. Would be great if the Federal Government could intervene in some way to have Visa / Mastercard / American Express / Discover use the same API interface for payments. Would dramatically increase competition for providers.
There is probably a neobank opportunity in providing this. FedNow is, reasonably, administered by banks. (The Fed doesn't want to provide end-user customer service nor incur liability for fraud.)
Far too much lobbying for any REAL competition to shake up the industry.
This will be exclusive to the federal government and state governments I imagine.
So when a completely dissimilar example of 'digital money' comes up, they equate it to crypto, even though it lacks many of the intrinsic aspects of crypto.
So, unfortunately, for these “crypto” maximalists, the crypto aspect of their digital currency is just some fun trivia and not something they even bother to leverage.
I don’t know whether the fed’s investigation into CBDCs will result in it adopting one. But FedNow has been designed in such a way that it could easily be modified to support one. You’d just have to implement a version of it where the allowed participants were everybody who’s allowed to have a bank account, rather than only banks.
Curious how this would work, it would be a pretty big inversion of asset control to make it work.
Saying "just have to" is a very big "just", considering it was aimed at only a few thousand institutions with very tight reporting requirements being the target audience instead of hundreds of millions of nontechnical users that would need something that just werks.
they are centralized in which funds can be seized, censored, and they all have money services licenses just like their corresponding banks do.
right, not like bitcoin, like bitcoin exchanges, just like the person said and you somehow ignored.
far more similarities than differences for this comment and the other comments at your level to be focusing on the differences and confused about the existence of similarities.
Now is a matter of banks to pay the providers[2] to integrate with their systems and ledgers.
[1] https://www.youtube.com/watch?v=le8Me8AfK8k
[2] https://www.frbservices.org/news/press-releases/072023-fedno...
I've never in my life received a wage in cash, as in, hard dollars.
Maybe a long time ago, but I get my pay which is supposed to be on the 1st and 15th on like the 13th and 29th or something. Getting paid "two days early" is a pretty common feature with Direct Deposit these days. It is always credited to my account before my actual paycheck technically gets posed.
> maybe charging a transaction fee
I imagine someone would be paying for the transaction of physically handling all the cash, no? Its not like having all the logistics of handling cash to potentially thousands of employees is a zero dollar cost. I imagine its massively cheaper for everyone to pay whatever marginal cost my employer is paying for ACH/DirectDeposit through their payroll app than paying a ton of people to handle and keep track of the cash.
My bank seems to trust my paycheck deposits, though, and they "clear" (update my balance and become spendable) under 24hrs after they show up as "pending."
So when my bank is crediting my account with my paycheck early, its because my work told them I'm getting paid that amount. Otherwise they wouldn't necessarily know of the amount. Sure, its like some kind of loan in a way, but its essentially paperovering the slowness of the ACH to actually clear in a decent timeframe.
Its honestly the same kind of logic they're using when you deposit your paycheck and it seems to clear turbo fast.
You would think there would _at least_ be a ceiling price. Makes me wonder why they can't show _any_ pricing.
"Spend the time and energy to build us into your product first and then we can talk price" is not the most reassuring of pitches.
I think the pricing is weird because you can start (and run!) for free, while the end to end solution requires negotiating with multiple parties.
Those middle companies have lobbyist representation and the govt has no intention of cutting any companies out of the payments industry.
For e-commerce, isn’t that SRC?
https://www.emvco.com/emv-technologies/secure-remote-commerc...
however, the payment itself is almost besides the point. the tricky part is the scheme / governance surrounding payments. who is liable for what, preventing fraud, etc. these large payment actors + the middlemen are more about fostering trust networks than moving the actual dollars and cents.
fraud in P2P payment networks (e.g. Zelle) is already a huge issue because a lack of a governing actor like a card network.[0] a different question is would the government ever provide this mediating role / lay out guidelines? would we want it to?
https://www.nytimes.com/2022/03/06/business/payments-fraud-z...
https://incometaxindia.gov.in/communications/circular/circul...
Besides this, stakeholders/partners of the NPCI are mandated to offer UPI services. I'm not sure if signing up was optional, but it would honestly be suicidal for a bank not to, given that there are so many competitors offering the same.
I keep appreciating the regulations in India, it is overall supportive of the common man. From say SEBI regulations on derivative markets to digital payments. For eg. credit cards are becoming less frequent, people here won't take out their cards for every other expense. People have become aware of the fact that money at the end is in bank and spending from the bank account hits much more real than a 30 day stream of cash 3-4 times your salary handed to you whenever you need. And so, low income and middle income groups spend wisely and don't get caught in spend cycles above their capacity.
Such an angle goes unappreciated, but hopefully this continues and money still be real and in our pocket.
A bank does not want to interact with you in the same channel as it interacts with another bank.
What there will be are services provided by banks which utilize this for instant transfers.
The middle companies between transfers you want. Most of the actual work is fraud prevention and dispute resolution... unless you want the only means of settling a dispute is through the courts.
Not really. All it will do is let the same companies change the way they handle average citizens' payments.
It's the same as Open Banking in Europe. It is supposed allow small businesses to leverage this to enable innovation and all that stuff, but when you want to use these APIs you find there are limitations on who can actually use it. For example, you can only put your service to production by being on a "directory" of approved providers, and to be on that directory you need something 25k or 50k in an account. So, not really that useful for a small startup wanting to make a product out of it.
Banking systems are the backbone of world power dominance, big players won't let small people share it.
That's modest angel investor money in a small city.
I do think this is a bit of a weak justification, though.
I mean, 50k puts it out of “a couple people starting something in their garage”, but it doesn’t really lock out much beyond that. That’s pretty close to the franchise fee for opening a McDonald’s.
Yes, it could be more equitable, but if that’s the only barrier to access, it’s… pretty open for even quite small businesses.
If you can’t scrounge together $50k to start a banking business, you probably should not be starting a banking business.
Bruh, I could get $50k right now if I go through a line of credit for small businesses as a regular person.
Look into going into the business and you will realise other hurdles like having some insurance that will cost you tens of thousands, and more costs. When you compare that, say, creating an app and putting it up on an app store, we can agree that there is a huge difference.
Of course I understand that banking means playing with people's money and therefore measures need to be put in place. But instead of requiring financial assets maybe the 'measure' should all be around technology and your service will have gone through extensive testing to ensure it won't be exploited. Otherwise 50k is peanuts like someone said when it comes to covering any financial loss incurred if your service is messed up. So that 50k is just to filter out a huge majority of individuals wanting to create something for themselves.
The network of banks supporting FedNow is still small, so we may not see meaningful payment volume for a while compared to ACH, Wires, Checks, etc.
https://news.ycombinator.com/item?id=31114620
It's never the merchant that gets hosed. It's the people not using credit cards.
Because, of course, the merchant just takes his banking expenses and forwards them right back to all customers by increasing prices across the board.
And it's not only the people not using credit cards that get hosed. Even the people with credit cards lose out - because the cash back is practically always smaller than the fee the merchant payed and forwarded to the customer.
As always, the real winner is only the bank. There's a reason for the market cap of MasterCard and Visa...
If FedNow can fit in with ApplePay, then it can displace credit cards in the first place! The corollary I’m drawing, is from India where “UPI” payments (something similar to FedNow) was launched about 7 years ago and today is the more dominant payment mode than credit cards.
FedNow can replace credit cards for cases where chargeback or actual credit isn't necessary. So for many ordinary cashless payments.
Arguably even for many cases (small to medium amounts of money) where the possibility of chargeback seems useful FedNow could be better in expectation, because the fees are lower. The credit card companies are making money after all. Using them for chargeback is like buying insurance for things you can replace out of pocket: On average, you make a loss.
I have no idea about fednow but you can directly transfer an unlimited amount of USDC to someone in about a second for $0.0025 right now on Solana.
Since free realtime payments presumably would still require both the sender and the receiver to use a participating financial institution, instead of all participants just transacting directly through the Fed, how is this supposed to work if most of the industry isn't participating?
FedNow is good for basically everything: Payments between individuals, employeers/employees, B2B, etc. More importantly, the fees are so low it might as well be considered free ($0.045/transfer) which is HUGE.
Why? Why would the companies presumably making good money with Zelle interoperate with something that's stealing their customers? It seems like there's no advantage for the entity running Zelle to allow interoperability, and there might even be ToS language preventing any bank or credit union currently in Zelle from so much as moving towards FedNow.
nearly all banks in the US should support FedNow within the next few years, if not much sooner, as it is seen as tablestakes for most bankers.
Eventually they all got on-board and now money is sent in seconds between accounts.
It didn't replace credit cards or direct debit but it's the reason why nothing like Zelle exists in the UK.
There's also some added benefits like being able to withdraw money from Paypal pretty much instantly.
Articles seem to imply that it can work in complement to zelle, so that may extend it’s reach quite a bit, no?
Why would a for-profit banking institution actively advertise for something that will affect its bottom line (e.g. transfer fees)..?
Obviates old-fashioned wires I suppose but those are rare and fee sometimes waived. Probably save money by reducing employee headcount.
A system like that exists in Europe already, banks operate for profit there too.
In the demos I watched, There is account number and routing number
On the other hand routing plus account number is kinda long.
What people are accusing them of is taking steps toward creating a digital dollar. This is their response, which is pretty mealy-mouthed if it's meant to address those accusations. A better way to express a denial would be "the Federal Reserve has no intention of creating a digital dollar and is not planning for nor working on that project," if indeed that is true.
Because if they DO create one in the near future, then this product SHOULD be designed as a step toward that. If they create a digital dollar and it uses any version of FedNow, then they're liars. If they create a digital dollar and it uses an entirely different product, they're incompetent.
The CBDC is still planned. But way far in the future (couple years, at least). And why wouldn't it solve settlement itself?
FedNow is shipping today. If it is not the future solution, that is fine. It gives us better performance now.
The characterization of the Federal Reserve as incompetent is the strong opinion I observed. I personally don't agree with the logic you communicated. I think a completely separate CBDC project that is separate from FedNow is perfectly appropriate.
IMO, many policy makers view FedNow as a better ACH.
Whereas, CBDC is a much more controversial project for some policymakers.
Separating the two projects offers some risk mitigation and ensures we will at least have something usable (1) in the short to medium term and (2) even if CBDC is mired in political non-consensus.
Perhaps they are planning for that already. My main complaint is the lack of both transparency and clarity in the quoted statement. I don't believe their response will satisfy anybody who is wondering if the Fed is working on a digital dollar, when it would have been very easy for them to do that. I sort of expect that kind of needle-threading response from private companies and individuals, but (naively) expect more transparency from public institutions.
If if that were true at this instant, they could change it at whim.
What is really needed is a constitutional protection of privacy.
In fact, the private sector solution is perhaps even worse from a civil rights perspective.
Consider a prosecutor in Jurisdiction A hell-bent on violating the civil rights of a citizen in Jurisdiction B, and suppose Jurisdiction B is sympathetic to this citizen. This isn't even hypothetical in the USA. Abortion, immigration, civil disobedience, etc. In the corporate duopoly setup, Jurisdiction A can compel the ISP to comply -- either by physically entering the property of the ISP and taking data by force, or by threatening market access. In the muni ISP case, Jurisdiction B says "shove it".
And that's before noting that corporations such as modern ISPs are -- like governments -- also large bureaucracies endowed with incredible power that are de facto impossible to opt out of. Except at least in representative government you have some sort of voice, however small, which isn't dependent on amassing vast sums of cash.
I dream of the day my municipality does this. The idea of buying service from whoever I want rather than be forced to use Comcast... -swoon-
Why is it horrible?
Meanwhile, wealthier people get paid in ‘unrestricted’ currency.
I'd just as soon give everyone dollars via UBI
Christian Gelleri made this proposal to solve the Greek crisis: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3144910
The government provides coupons that allow you to buy food which is remediated to the seller in dollars. The authority and funding to provide that service is something that voters can impact or change.
These are very different things, not "that already exists" at all.
This is an primarily American phenomenon though and it's only really true because of the dominance of the US and US petrodollars over global society. It's probably not easy to spend Turkish lira in Madagascar, for example. Yes there are banks which will exchange approved currencies, but that's one step removed from being paid in a global global currency as you imply.
If anyone ever mentions petrodollars, CBDC, or crypto to you, they are crazy and I recommend stealing their wallet. (Since they're into crypto they're used to it.)
At best this kind of stuff is a harmless ideological pressure release valve for a discontented middle class / small business / entrepreneurial layer squeezed from above (esp after COVID). At worst it veers into outright authoritarian & xenophobic politics and often blends in some anti-Semitism. Starts with rants about Bretton-Woods and the next thing you know you're hearing about the Rothschilds.
There was a whole wing of this stuff ascendant in the 1930s (in western Canada we had "Social Credit", for example) whose ideological purpose was to displace left wing populism and anti-capitalist politics with an explicitly pro-capitalist highly social conservative narrative which pinned blame for problems on "international banking" and, ultimately, Jewish people.
The latest flavour is obsessed with talk about "petrodollars" and cryptocurrency, and then you scratch a little and there's the face of Sergei Lavrov or Marie Le Pen hiding under the paint.
The world is f*cked and unjust but not for the reasons that these people go on about.
I do agree that the bulk of the foundation of the world's economy is constructed over the petroleum economy. Though I also don't think the nature of power in the world would change significantly if that were to be replaced with something else or if the nationality of the currency it is traded in were to change.
I actually prefer we give out UBI, in a tracked manner, as well.
"cash" they can spend on anything, but with data collection so we can do society improving retrospectives on how it was spent.
Then you can enforce meat and fossil fuel rations with no way to buy yourself around it.
If there were political motive and will to implement such a system, it could be done without a CBDC and certainly without modernization of ACH (heh).
Conversely, if there's not political motive and will, then the presence of a CBDC doesn't change that fact.
Many are concerned that cdbc will allow the gov to create carbon rations that are enforced by disallowing purchases. Cash is fungible while regulated digital currency isn't.
Plus, if the goal is to limit carbon emissioms, it's more of a liberal market-shaping attitude that mainstream economists have to simply tax carbon heavy activities rather than invent new and unpopular technological measures to force it to happen. Same applies to the fears about limiting meat consumption, etc.
(I’m not in any way a climate denier, just a huge pessimist when it comes to attempted solutions)
https://medium.com/beyondmoney/the-good-bad-and-ugly-of-cbdc...
https://medium.com/illumination/how-the-central-banks-digita...
* the Biden administration is planning to monitor smaller denomination transactions (in an inflationary environment!)
* IRS resources historically and presently target low-income, low-wealth households/individuals for audits
https://www.cnbc.com/select/irs-600-reporting-rule-delayed/
https://www.cbsnews.com/news/irs-audit-eitc-five-times-as-li...
For high net wealth audits, you could have potentially dozens of people working on it for years so there is a possibility that a judge / jury rules in your favor.
They are going after low effort people, but making it up by volume.
I'll let you figure out why.
I'll shorten the explanation even further: many more easy/no contest wins.
Wrong question. The correct question is:
What benefit would the IRS targetting low wealth individuals have to high wealth individuals?
This also depends if by "audits" you include every kind of correction letter the IRS sends you.
If we could actually increase their funding substantially, this would be less true, but it's difficult and expensive to go after wealthy individuals.
Fixed this for you.
I don't really want a gigantic federal agency having insight into every financial transaction I make. Hard, fucking, pass.
If that's the case, I have bad news for you about the banking system of literally every developed country.
I can buy an icecream anywhere in the world without anybody tracking me. Even with the "wrong" political opinion (even if I would be a trucker in Canada during certain protests).
I cannot do that with CBDC.
No. CBDC (aka: the ultimate totalitarian's dream) is not the same as the current banking system, despite the current banking system also being very horrible for privacy.
* All of the above assuming that cash will be banned and CBDC will be mandatory for everybody.
No you can't. Companies like OpenEye and Deep Sentinel offer facial recognition solutions that are targeted at loss-prevention, and these systems are commonplace in the USA. Facial recognition-based consumer analytics systems are also available.
In fact, I think you'd be hard pressed to find a pint of ice cream that you can buy without having a camera pointed at your face. Even the little stand at the beach in the state park near my old place had a camera, and I didn't even have real LTE coverage there.
Privacy comes only from the force of law; not the other way around.
Anyways, the whole conversation is a red herring. This is a replacement for ACH, which already exists, and there isn't substantively more information sharing between banks and governments than already exists.
Anyways, it's not (fully) about information sharing. It's about control. It's the difference between read access and read/write access.
Anyways, you missed the point.
The anti-new-technology and anti-gov-technology response to privacy and control is misguided. Corporations will fuck you, left unchecked, and governments will fuck you through corporations. There is no technical solution to political problems, and physical cash vs FedNow vs digital currency is a suite of technical solutions.
Trying to solve a political problem by eliminating technology is literally the same thing as trying to solve political problems with technology. The fallacy is in focusing on technology where the actual problem is political.
The problem is political and needs to be treated as such. The solution is building and maintaining political consensus in favor of strong privacy and personal property rights, not carrying around a billfold full of physical cash.
Can’t even recall to ever pulling some out other than some casino entertainment night. I understand all the “freedom” (or whatever one might call it) I’m losing, but the positive sides are much better (never have to care about losing my wallet, much faster transactions, convenience and etc.). Sure, sounds bad on paper, but I haven’t felt any negatives in 10+ years, especially when in practice makes my life easier.
Unfortunately, in my experience, I'd have to agree with you on that. But it also brings to mind a relevant Samuel Adams quote:
“If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen.”
Are you think they won’t need search warrants?
This is what's bizarre to me about the FedNow hysteria. It's not a government system replacing a private market system. It's a government system replacing an older, worse government system. It's like having a panic attack because the Federal Reserve is updating their PCs to from Windows XP to Windows 10.
I'm torn on this. Visa, MasterCard, Venmo (aka PayPal), etc. all know about large subsets of my transactions, and they go and sell my personal data to other companies in sleazy ways to cover their costs.
Is that better or worse than the government knowing all this stuff? Sure, the government can also legally use force against me and deprive me of my freedom and possessions, and might pervert my transaction history into justifying doing bad things to me. But that's a risk, not a certainty. Private companies selling my data and using it in nefarious ways is a certainty.
the government already knows.
the freezing of accounts related to the "Freedom Convoy" is quite different, as it was an exercise of emergency powers. the Trudeau admin could have ordered gas stations to not sell fuel to them, or Visa/MasterCard to not process certain cards, or anything similarly extraordinary.
The point of keeping the government out of the banking business would be to keep the door cracked for the chance to improve it later. That door slams shut once the federal government has the insights into every transaction, and more importantly the ability to deny ones they don't want us to do. We also Wil have much less control over the creation of a social credit score, theoretically the government would have everything it needs to make that happen with control over our transactions.
But the list goes on..
CBDC really isn't a big issue either, because it almost certainly won't happen. Americans are very unlikely to want a system like that.
https://www.cambridge.org/core/journals/perspectives-on-poli...
Arguably the US government effectively has these powers today, but beingtthat they don't directly own our banks there is a level of red tape they have to go through. As long as they are technically separate there is also the opportunity for us to change the laws and strip them of that access, once combined we give up that possibility.
The US was originally design with a very strong distrust of our own federal government. For the last 80 years we've completely flipped the script and given more and more power to a massive federal government, but the undertone of distrust is still around for quite a few Americans.
Furthermore any end user interface provided by the bank could have its own limit, since FedNow is just a backend service, frontends are up to each participating provider.
Regarding payment systems specifically, people generally don't realize what they're missing.
Pick anybody from anywhere and they'll tell you they've been able to do everything they ever wanted to do (with regards to payments) using the already-existing systems of their country.
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.
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.
Does FedNow, or whatever batch job it is replacing, involve ABC telling FedNow "This is for a transfer from Jane Doe (SSN 123-45-6789) to Joe Bloggs (SSN 098-76-5432)"? As I imagined it, FedNow would only need to know what bank is sending and what is receiving.
FedNow is more of an extension to ACH than a replacement for it.
Same-day ACH also exists, although it's relatively new. FedNow is faster than same-day ACH though.
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.
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 .
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.
Nothing is stopping banks from creating something better.
I'm fine with an alternative that's also free. No need to pay me when I use the service.
Should I be feeling sorry for the poor banks that were too greedy to come up with this new payment solution? I'll try.
That's intresting to know.
Where I'm at, we had (still have?) a "passbook", a small booklet where you could get all your transactions printed onto.
But AFAIK we couldn't do it ourselves through the teller machine though. Once in a few months or so you go to the respective bank and ask the staff there to update the passbook. They use a machine, however.
Of course, there days it's unnecessary as you can electronically download a list of your transactions for a given period from the bank's website/app.
I do still receive them occasionally, almost always as printed checks from companies.
By this I mean, in the US everyone could use CashApp, Venmo, PayPal, Zelle (glorified ACH, right?), etc. for p2p payment. If you have the same bank, many banks have a trivial "send money to another customer's account" feature. However, to do so requires essentially a 'handshake' where the two parties agree on a method. Checks require no up-front handshake, since everyone knows what to do with a check (deposit it at your ATM, take a picture of it with mobile app, or take it to a check-cashing place or the issuing bank).
If I could print on paper a key or QR code that allows you to claim the money into the account of your choice, like a check does, I'd use that. Sadly, banks seem to have put their effort into Zelle instead.
Also, there is less of a need for a receipt when paying by check. If I pay someone by check, my bank has a record of it. If I pay them by cash, I better get (and keep) that receipt in the case of a later non-payment dispute.
For all I know, they might even be banned from that app, and unable to sign up to retrieve my payment.
It’s not unusual for me to get an invoice for a company via QuickBooks Online, with cash or check as the only payment options.
Other businesses around here have started giving discounts for paying with cash or check versus apps or credit/debit cards, to avoid the recent increases in fees.
I’ll also write checks when having a “hard” traceable payment instrument physically makes sense for auditing purposes or fraud prevention, although that’s less frequently needed.
Australia/Canada have been doing free bank transfers since before I was old enough to know
Of all things my life insurance company is still not set up for credit card payments. In 2023.
Boggles the mind.
I think the last time I actually wrote a physical check was when I refinanced my house in 2021.
And yet in Japan they're still obsessed with using backwards fax machines and paper.
I think it's easy to forget that societies that adopt a technology early might be doing so because the slightly outdated alternative from elsewhere was never brought over. Japan has no shortage of those, like a lot of dining is still cash only. Who knows, perhaps in 10 years those restaurants will skip credit cards and contactless and go straight to face-based automatic payment.
[1] PDF warning https://www.ilo.org/dyn/travail/docs/2018/Labor%20Standards%... [2] 1991 article https://www.sun-sentinel.com/1991/10/24/japanese-prefer-cold...
What the hell? I need 'checks' of some kind (regular check or cashier's check) maybe once a year for something like a deposit on a rental home.
For actual rent payments and the like I use Zelle, since most major banks support it. What do you need actual paper checks for?
Anyway I have a theory: big countries are too far up their own ass to notice or care what the rest of the world is up to.
Compare a small, international oriented country like the Netherlands or Denmark to sleepy provincial Germany.
This is like comparing candles and lightbulbs. Sure you can light up your home using both methods just fine, but you end up realizing how inconvenient candles were once you've made the jump to the newer technology.
As an American, this definitely isn't true for me. I've found so many large organizations fail to make auto-pay work, transferring money is mind-bogglingly slow, and going from magnet to chip-and-pin instead of straight to tap-and-go was a regression. Some companies are able to bill you after you no longer wish them to bill you, while other organizations make it difficult to find out how much you even owe them in the first place when you want to pay them. Not sure how much the last couple can be solved with incremental tech.
But if it did include the US, it would have the assumption that Americans are unaware how terrible our payment systems are (generally untrue I think) or unaware that other countries have better systems (may or may not be generally true).
I thought FedNow was explicitly inspired by the success of India's UPI?