[spacebanana7]

A hybrid solution could be a grade of bank accounts whose deposits are backed 1:1 by short dated government debt.

You get most of the safe custody benefits of CBDC whilst minimising the costs of restructuring the banking system. Customers could still use all the same banking apps and branches.

Such a program could even be eased in over time by steadily increasing the proportion of bank balance sheets allocated to short dated government debt.

[JDEW]

Narrow banks. The FED didn’t like the idea…[0]

[0] - https://johnhcochrane.blogspot.com/2018/09/fed-nixes-narrow-...

[spacebanana7]

That's deeply frustrating. The FED's potential opposition about balance sheet control and reverse repo have clear weaknesses pointed out by the author you cite.

[drexlspivey]

You can already do that by buying a money market fund no?

[spacebanana7]

To the best of my understanding you can’t initiate payments with a money market fund using, say direct debits or visa/Mastercard. So they can’t replace an ordinary bank account.

[zaxcellent]

There are accounts out there which can function this way, often called Cash Management Accounts. Fidelity has one that works this way: https://accountopening.fidelity.com/ftgw/aong/aongapp/intere...

[thwayunion]

Can't replace it. But with some trivial API glue and a cron job, you can get away with storing next to nothing in the bank account on most days as long as all of your credits and debits are scheduled and upper-bounded. E.g., if the debit side of your entire financial life is payroll + rent + credit card bills.

But this shifts risk from your FDIC insurance to your SIPC insurance.