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.
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.