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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.
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.
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Because there are many Americans who are small gov and against excessive taxation. A CBDC is "too far" for a lot of people who believe that.
Imagine being paid in a ‘programmable’ currency that your employer (or government) decides cannot be spent on alcohol, meat, or fossil fuels. Meanwhile, wealthier people get paid in ‘unrestricted’ currency.
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.
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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.
Well, it's still possible with barter goods, just a lot harder. Isn't there a cryptocurrency that's actually private too? (I know Bitcoin is not)
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Imagine being paid in a ‘programmable’ currency that your employer (or government) decides cannot be spent on alcohol, meat, or fossil fuels. Meanwhile, wealthier people get paid in ‘unrestricted’ currency.
That already exists today, food stamps/SNAP/EBT for low income and dollars for everyone else I'd just as soon give everyone dollars via UBI
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.
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 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…
If if that were true at this instant, they could change it at whim.
What is really needed is a constitutional protection of privacy.
For those curious, it is really using IBM MQ[1] under the hood and uses a bespoke flavor of the ISO 20022 specification. The FedNow Service itself is the tip of the iceberg in terms of what actually happens from an end-to-end perspective. We've been working to become a Certified Service Provider so feel free to ask me anything. I'm happy to share anything that is not under NDA. [1] https://www.ibm.com/products/mq
Tell us as much as you can about the tech stack. What is going to be able to handle truly massive volumes of transactions? Database, hardware, communications channels, programming lang, everything.
[1] https://explore.fednow.org/resources/technical-overview-guid...
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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?
I assume that the TTL of the money would reset once it has changed hands
I just don't see how this is realistic. It is basically impossible to enforce.
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 d…
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.
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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.
You need to see it from the merchants perspective. What if they offered you a 5% discount for paying with FedNow?