[arcticbull]

The dollar is already a digital currency, and its issuance is largely decentralized. Most dollars are issued by retail banks. What you can't do is self-custody the digital dollars or have an account at the Fed.

FedNow is going to be fine, just like ACH but faster. PayPal sucks in a lot of ways, but there are reasons you would use it over an actual money sending service like Zelle, FedNow or Wise. For what it's worth it's pretty rare that I have been materially adversely affected by the latency of an ACH payment. That's not to say I don't welcome FedNow with open arms, though, I very much do.

[WeylandYutani]

I used PayPal a few times because I didn't have a credit card. It is shit. Sending money from bank account to bank account without an intermediate parasite is not only efficient it's also more censorship resistant.

[plantain]

>it's pretty rare that I have been materially adversely affected by the latency of an ACH payment

What about every time you make a credit card payment (and associated fees)?

[arcticbull]

We don't use credit cards in place of ACH at the point of sale.

Debit cards maybe, but of course, debit card fees were significantly constrained in the US by the interchange caps in the Durbin amendment to Dodd-Frank in 2010. Non-exempt debit interchange (most of it) is capped at $0.22 + 0.05%. [1] In Europe it's been capped at 0.2% since 2015.

This compares to a FedNow transfer cost of $0.045 [2] - although I suspect there are significant bulk discounts here to financial institutions -- and surcharges to retailers. I'd call this "give or take the same" as the price of a non-exempt debit payment, but you may disagree.

I believe ACH clocks in at $0.003 in bulk to financial institutions.

Credit cards are not money transfer products so much as loan products. The actual interchange, the cost of processing cards, is quite low. In Europe it's capped at 0.3%. In the US most of the delta between what merchant acquirers charge and interchange is paid back to customers in the form of points or cash back, which basically just don't exist in the same way in Europe or other capped markets. Customers also like the insurance products, the ability to charge back, better fraud handling and the ability to batch their transactions into a single lump sum.

We pay a premium for these premium services.

[1] https://www.checkout.com/blog/revisiting-the-durbin-amendmen...

[2] https://www.frbservices.org/news/press-releases/012722-fedno...

[devoutsalsa]

How do retail banks issue dollars?

[WesternWind]

loans basically, I think?A deposits $100 you loan $97 of it to B who deposits that in their account. But A still has their $100.

[arcticbull]

Yes, also dollar creation outside of the jurisdiction of the Fed, like the Eurodollar market. These are US dollar denominated deposits in foreign countries at banks that don't have Fed accounts and can't even settle via Fedwire (instead relying on CHIPS).

The repo market is another example - and derivatives markets.

The main job of the Fed is be a clearinghouse. They don't really even know how much money is out there, let alone have omnipotent control over the supply. Monetary policy is only possible because of their role as a clearinghouse, but I digress.