The Fed has had a wire service (Fedwire) for banks, allowing them to transfer their balances on the Fed’s balance sheet to another bank during settlement, since before the dollar moved off the gold standard. It was initially done with literal telegraphs - not sure at what point it became digital.

It obviously has no pseudo anonymity, is literally the least democratized banking system in existence, and is subject to the government’s whims in a whole host of ways. But it is a digital ledger of massive sums of real dollars (the banks can ask for it in cash if need be), and you couldn’t really steal the money even if you managed to create an unauthorized transfer on some bank’s master account.

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charcircuit 2 days ago | parent | next [-]

So why don't any businesses let me Fedwire them money? It turns out unlike the physical version of cash, this "digital version" has hefty transaction fees and a poor UI meaning no business will take it, unlike how almost all physical businesses will take cash.

	▲	johncolanduoni 2 days ago \| parent [-]
		That’s not a technical problem - this kind of system can scale out just fine and has in other jurisdictions. SEPA is far from perfect, but is better than Bitcoin for everything but evading governments (justified or otherwise). We’ll see what Fednow looks like in a few years - the banks are definitely dragging their feet and it’s hard to tell what the UX will look like in the end.

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lmm 2 days ago | parent | prev [-]

> the banks can ask for it in cash if need be

Ehhh, can they? I suspect any bank that tried would pretty soon find that it actually couldn't.

	▲	johncolanduoni 2 days ago \| parent \| next [-]
		They couldn’t get their whole balance in cash I’m sure. But the Fed is the one that handles retiring old paper currency and giving banks fresh currency to give to ATMs and tellers, and I doubt the inflows and outflows are perfectly even for each bank.
	▲	squillion 2 days ago \| parent \| prev \| next [-]
		I think we’re talking about bank reserves, which is a fraction (in the order of 1%) of the total amount of money held in the customers’ transaction accounts. Reserves are convertible into cash. Not that any bank would suddenly want to do that, unless there’s a bank run, in which case it’s the customers who want the entirety of their accounts (100x the reserves) converted into cash, which is impossible not because the fed refuses to convert the money, but because the bank doesn’t have enough reserves.
	▲	lazide 2 days ago \| parent \| prev [-]
		The Fed manages printed currency - they’d be irritated, but they literally do provide the physical dollars people need now, and if they felt it was appropriate, they’d produce them as needed. Just like those airplanes of bills shipped to Iraq, etc. in the past.