[koolba]

No bank is obligated to use the Fed system. Unless you want to process a Fed wire or ACH. Or you want FDIC insurance. Or you want to offer banking services to consumers. Or you want access ti the Fed window for short term liquidity.

But if you put those aside and somehow manage to get a bank charter, you could totally eschew the Fed.

Now if you do play in their ballpark you have to play by their rules. And a big one there is the rate that you’ll get on short term deposits. And given the scale it implicitly sets the pace for interbank rates as they have to directly compete with the Fed.

[pfannkuchen]

“No one is forcing you to buy bread from the government run nickel bread company, you are free to start your own company and charge whatever you like. If others choose to buy the government’s bread for a nickel, well, hey, that’s just the free market for you.”