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> Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the ye

> Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year. Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something?

lisper 3y ago
> Is this akin to government-backed Venmo, or something? Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.
- iudqnolq 3y ago
  > On the other hand, it's going to let the government see every transaction you make Can you go into more detail here on what you think will change from the status quo? Existing bank transfers are obviously not secret from the government on request. While the government doesn't have direct access to run search heuristics on the whole dataset they just delegate that to the banks' internal compliance team.
  - caseysoftware 3y ago
    If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government. Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you. *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
    - iudqnolq 3y ago
      > If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. If the federal government wants to tax things they indeed can. But I was asking about a chance from the status quo. If you owe the US government money right now they can take it out of your bank account. > Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government. You can shop around for a different bank but it will still follow US law and also go above and beyond to help out the feds. > Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you. Yes, but this already exists. https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists https://ofac.treasury.gov/specially-designated-nationals-and... > *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited. Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
      - jonhohle 3y ago
        If the government could stop cash transactions entire classes of crime would be significantly more impractical (while at the same time significantly invading the privacy of all citizens).
        id0ntw4ntit 3y ago
        Can't stop cash, cash is a fact.
        cryptonector 3y ago
        Sweden joins the chat
  - lisper 3y ago
    The magnitude of the change is somewhat in the eye of the beholder. On the one hand, the government already has a lot of visibility into your finances. On the other hand, this removes some friction that currently exists for certain kinds of transactions. This matters more to some people than others. There is also concern that this might be a step towards the eventual elimination of cash.
    - iudqnolq 3y ago
      I find it annoying that we have these endless debates in the US where it's assumed that if there's some magnitude it of course must be more than epsilon. I would be interested in if anyone can give a example where the friction increases in such a way as a person would experience an actual difference, or how this would actually make cash easier. Otherwise this sounds to me like the endless silly arguments against a national id card by people. (State ID cards that then go into a federal database are no more private but come with annoying downsides like ID.me)
      - didntcheck 3y ago
        I wrote a comment on another thread today about this wrt surveillance. Reduced friction in surveillance definitely is something to be feared, as the evidence is that if the government/police/alphabet agencies can use a power (literally, not necessarily legally), they will. The only thing holding them back in the pre-digital age was the high cost of physical surveillance and even data storage, when "files" were things you held. The difference in quantity of possible surveillance has become a difference in quality, where it's just "common sense" that the government can easily pull your movements from cell tower records, and that they'll do so regardless of whether they're allowed to (or say "terrorism!" allows them to)
  - carlosjobim 3y ago
    Automated surveillance and automated interference. If you think YouTube's algorithms for determining copyright or Facebooks algorithms for "community standards" are bad, wait until you have your bank account locked and can't buy food.
  - EgregiousCube 3y ago
    It lowers the cost of the government performing wide surveillance of financial activity; the fear is that lowering this cost will enable more advanced forms of detection and enforcement that ultimately look and feel like harassment.
    - culopatin 3y ago
      What makes you think the government can’t look over the current system as easily?
      - EgregiousCube 3y ago
        As mentioned by a few folks elsewhere in these comments, if FedNow is wildly successful and takes a meaningful portion of payments, it centralizes information about lots of peoples' financial activity in one place, across banks and across payment platforms. This potentially leads to FedNow being a one-stop OLTP shop for governments to run queries against realtime data, or even build stream processing agents that filter or take action on patterns. Currently, it would be more difficult to build this database as it's hodgepodged together from suspicious activity reports and subpoenas. There's of course the unknowable possibility that law enforcement and security agencies have secret ways of building a comprehensive realtime dataset - but, if they do exist, their secret nature reduces the scope of situations in which they can be used.
        culopatin 3y ago
        How is that different from ACH?
        EgregiousCube 3y ago
        ACH is slow and coarse, FedNow is capable of being realtime and fine-grained. Two institutions might have one giant ACH per day between them that includes a ton of smaller transactions that are all invisible to the ACH system itself.
- delfinom 3y ago
  The government can already see all your ACH transactions like payroll, rent, etc because the Fed Reserve literally runs ACH. This also isn't replacing credit cards or the like, so it is basically an ACH replacement. That's on top of reporting requirements banks already have for your transactions.
  - jsmith45 3y ago
    The Fed only runs FedACH, which is one of two ACH networks running the same protocol. The other is The Clearing House Payments Company's Electronic Payments Network. Indeed there used to be more private network operators, but the other two eventually folded, leaving just these two remaining.
- mixmastamyk 3y ago
  Govt can already see any bank transaction made as it chooses already. Question is, why does this fact get brought up everytime as if it’s novel?
- cameldrv 3y ago
  I don't see how this is much different than the current situation. The Fed already processes ACH transactions (basically all bill-pay, most transfers to/from Paypal/Venmo etc), and all wire transfers (most high dollar money transfers)
  - lisper 3y ago
    The new system is faster.
- seydor 3y ago
  paypal , visa and the like have proven to be worse than most governments
- mlsu 3y ago
  Put the flag of North Korea into the notes of a venmo transaction. You will very quickly find out the extent to which the government knows what you are doing with your money.
  - imilk 3y ago
    That's just not true and conspiracy nonsense.
    - booleandilemma 3y ago
      Maybe not that specific example, but it's very true generally. You can get your account blocked for specific words in your Venmo payments: https://www.inc.com/tess-townsend/venmo-reportedly-blocking-payments-that-use-the-word-persian.html https://www.inc.com/tess-townsend/venmo-reportedly-blocking-... https://angelinatravels.boardingarea.com/2017/05/04/careful-venmo-descriptions-venmo-account-frozen/ https://angelinatravels.boardingarea.com/2017/05/04/careful-... I tested one of these and had to send Venmo customer support an email explaining I was not a terrorist.
      - yieldcrv 3y ago
        which once again has nothing to do with the government and everything to do with Venmo incorporated (Paypal Inc.) choosing to operate that way out of fear of the government
        sudosysgen 3y ago
        Current finance laws are such that if PayPal stopped having this kind of fear of the government it would likely go under. It's just a loophole to get around the 4th amendment.
  - yieldcrv 3y ago
    Thats actually a private corporation having an excessively skittish interpretation of federal regulations. The government would still need to go out of their way to know about that transaction. And the liability would only come after you or the organization got in trouble for something else.
- s3p 3y ago
  Ok but.. ACH
- bhdlr 3y ago
  > > Is this akin to government-backed Venmo, or something? > Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay. No, exactly wrong. It's a gov Blockchain
rvz 3y ago
> Whoa. Is this as awesome as it sounds? No. A possible CBDC rails in the US is nothing to get excited about. Unless you want savings limits and expiry dates on your money. > Is this akin to government-backed Venmo, or something? Yes, but even worse.
- imtringued 3y ago
  >Unless you want savings limits and expiry dates on your money. I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well. This is particularly relevant with debt brakes. A country with a debt brake but without a savings brake is going to run into a pretty fundamental limitation. Savers can delay their spending decisions and this ultimately delays the ability to repay debts but since debtor's are at the mercy of lenders, we blame the debtor for the lenders tardiness.
  - nimbleplum40 3y ago
    Savings and debt in an economy are related, but not 1:1. See the money multiplier [1]. [1] https://en.m.wikipedia.org/wiki/Money_multiplier https://en.m.wikipedia.org/wiki/Money_multiplier
    - spiralx 3y ago
      Which, as the article says, is an inaccurate model of how modern monetary economies actually work. Bank loans create new money, they don't lend out existing deposits, and repayments destroy that money. Reserve requirements - in countries that have them - don't affect whether a loan can be made or not.
      - nimbleplum40 3y ago
        > Bank loans create new money, they don't lend out existing deposits Do you mind clarifying? I agree banks create new money, but they do that by lending out existing deposits. A bank can’t lend out money that don’t have on their books…
bhdlr 3y ago
> > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year. > Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something? No, under the hood it's a government Blockchain
- everfree 3y ago
  Does it use cryptography to digitally sign its messages?
TRiG_Ireland 3y ago
So, almost like SEPA, but not as good, as not all banks are in it? I can type anyone's IBAN* into my banking app and transfer them money pretty much instantly. However, ours will have a delay outside banking hours, which is annoying. Sounds like FedNow is always instant, which is a definite improvement. * Any IBAN from a SEPA country, at least.
- pragmatick 3y ago
  "Normal" SEPA isn't instant either. You need SEPA Instant Payments for that and many banks don't support that yet although an EU directive is supposed to make it mandatory to at least be able to receive them, I think.
- Nemo_bis 3y ago
  A large portion of SEPA bank accounts can now use TARGET Instant Payment Settlement (TIPS) on TARGET2/T2. https://www.ecb.europa.eu/paym/target/tips/html/index.en.html https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm... My mid-sized Italian bank has a promotion right now to make instant payments with only 1 € in fees (instead of the usual 7 they charge, or 0 for "normal" bank transfers settled overnight).

lisper 3y ago

> Is this akin to government-backed Venmo, or something? Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay.

iudqnolq 3y ago
> On the other hand, it's going to let the government see every transaction you make Can you go into more detail here on what you think will change from the status quo? Existing bank transfers are obviously not secret from the government on request. While the government doesn't have direct access to run search heuristics on the whole dataset they just delegate that to the banks' internal compliance team.
- caseysoftware 3y ago
  If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government. Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you. *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited.
  - iudqnolq 3y ago
    > If the government wants to tax these transactions - and let's admit it, they do - they'll take it right off the top. If the federal government wants to tax things they indeed can. But I was asking about a chance from the status quo. If you owe the US government money right now they can take it out of your bank account. > Unlike with the banking system where different banks have different prices for wires - or even free under certain conditions - you can't "shop around" for a new government. You can shop around for a different bank but it will still follow US law and also go above and beyond to help out the feds. > Further, if a government determines you are not an "acceptable" participant, they have the ability to stop transactions to/from you. Yes, but this already exists. https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists https://ofac.treasury.gov/specially-designated-nationals-and... > *Ability doesn't necessarily translate to authority - you can probably fight it - but the government's legal fees are paid by us so they're effectively unlimited. Yes but your legal remedies might actually be better under FedWire. US fourth amendment law has a massive loophole whereby if a private business "voluntarily" assists the government it doesn't count as a search. So if the government searches your government bank account you'll have potentially better remedies than if they ask your private bank to pretty please send a printout. (and there's very little chance your current bank tells the feds to shove off and come back with a warrant in that kind of situation)
    - jonhohle 3y ago
      If the government could stop cash transactions entire classes of crime would be significantly more impractical (while at the same time significantly invading the privacy of all citizens).
      - id0ntw4ntit 3y ago
        Can't stop cash, cash is a fact.
        cryptonector 3y ago
        Sweden joins the chat
- lisper 3y ago
  The magnitude of the change is somewhat in the eye of the beholder. On the one hand, the government already has a lot of visibility into your finances. On the other hand, this removes some friction that currently exists for certain kinds of transactions. This matters more to some people than others. There is also concern that this might be a step towards the eventual elimination of cash.
  - iudqnolq 3y ago
    I find it annoying that we have these endless debates in the US where it's assumed that if there's some magnitude it of course must be more than epsilon. I would be interested in if anyone can give a example where the friction increases in such a way as a person would experience an actual difference, or how this would actually make cash easier. Otherwise this sounds to me like the endless silly arguments against a national id card by people. (State ID cards that then go into a federal database are no more private but come with annoying downsides like ID.me)
    - didntcheck 3y ago
      I wrote a comment on another thread today about this wrt surveillance. Reduced friction in surveillance definitely is something to be feared, as the evidence is that if the government/police/alphabet agencies can use a power (literally, not necessarily legally), they will. The only thing holding them back in the pre-digital age was the high cost of physical surveillance and even data storage, when "files" were things you held. The difference in quantity of possible surveillance has become a difference in quality, where it's just "common sense" that the government can easily pull your movements from cell tower records, and that they'll do so regardless of whether they're allowed to (or say "terrorism!" allows them to)
- carlosjobim 3y ago
  Automated surveillance and automated interference. If you think YouTube's algorithms for determining copyright or Facebooks algorithms for "community standards" are bad, wait until you have your bank account locked and can't buy food.
- EgregiousCube 3y ago
  It lowers the cost of the government performing wide surveillance of financial activity; the fear is that lowering this cost will enable more advanced forms of detection and enforcement that ultimately look and feel like harassment.
  - culopatin 3y ago
    What makes you think the government can’t look over the current system as easily?
    - EgregiousCube 3y ago
      As mentioned by a few folks elsewhere in these comments, if FedNow is wildly successful and takes a meaningful portion of payments, it centralizes information about lots of peoples' financial activity in one place, across banks and across payment platforms. This potentially leads to FedNow being a one-stop OLTP shop for governments to run queries against realtime data, or even build stream processing agents that filter or take action on patterns. Currently, it would be more difficult to build this database as it's hodgepodged together from suspicious activity reports and subpoenas. There's of course the unknowable possibility that law enforcement and security agencies have secret ways of building a comprehensive realtime dataset - but, if they do exist, their secret nature reduces the scope of situations in which they can be used.
      - culopatin 3y ago
        How is that different from ACH?
        EgregiousCube 3y ago
        ACH is slow and coarse, FedNow is capable of being realtime and fine-grained. Two institutions might have one giant ACH per day between them that includes a ton of smaller transactions that are all invisible to the ACH system itself.
delfinom 3y ago
The government can already see all your ACH transactions like payroll, rent, etc because the Fed Reserve literally runs ACH. This also isn't replacing credit cards or the like, so it is basically an ACH replacement. That's on top of reporting requirements banks already have for your transactions.
- jsmith45 3y ago
  The Fed only runs FedACH, which is one of two ACH networks running the same protocol. The other is The Clearing House Payments Company's Electronic Payments Network. Indeed there used to be more private network operators, but the other two eventually folded, leaving just these two remaining.
mixmastamyk 3y ago
Govt can already see any bank transaction made as it chooses already. Question is, why does this fact get brought up everytime as if it’s novel?
cameldrv 3y ago
I don't see how this is much different than the current situation. The Fed already processes ACH transactions (basically all bill-pay, most transfers to/from Paypal/Venmo etc), and all wire transfers (most high dollar money transfers)
- lisper 3y ago
  The new system is faster.
seydor 3y ago
paypal , visa and the like have proven to be worse than most governments
mlsu 3y ago
Put the flag of North Korea into the notes of a venmo transaction. You will very quickly find out the extent to which the government knows what you are doing with your money.
- imilk 3y ago
  That's just not true and conspiracy nonsense.
  - booleandilemma 3y ago
    Maybe not that specific example, but it's very true generally. You can get your account blocked for specific words in your Venmo payments: https://www.inc.com/tess-townsend/venmo-reportedly-blocking-payments-that-use-the-word-persian.html https://www.inc.com/tess-townsend/venmo-reportedly-blocking-... https://angelinatravels.boardingarea.com/2017/05/04/careful-venmo-descriptions-venmo-account-frozen/ https://angelinatravels.boardingarea.com/2017/05/04/careful-... I tested one of these and had to send Venmo customer support an email explaining I was not a terrorist.
    - yieldcrv 3y ago
      which once again has nothing to do with the government and everything to do with Venmo incorporated (Paypal Inc.) choosing to operate that way out of fear of the government
      - sudosysgen 3y ago
        Current finance laws are such that if PayPal stopped having this kind of fear of the government it would likely go under. It's just a loophole to get around the 4th amendment.
- yieldcrv 3y ago
  Thats actually a private corporation having an excessively skittish interpretation of federal regulations. The government would still need to go out of their way to know about that transaction. And the liability would only come after you or the organization got in trouble for something else.
s3p 3y ago
Ok but.. ACH
bhdlr 3y ago
> > Is this akin to government-backed Venmo, or something? > Yes, exactly. But you have to keep in mind that this is a two-edged sword. On the one hand, it's going to be convenient and probably secure. On the other hand, it's going to let the government see every transaction you make, which for some people will be a very high price to pay. No, exactly wrong. It's a gov Blockchain

rvz 3y ago

> Whoa. Is this as awesome as it sounds? No. A possible CBDC rails in the US is nothing to get excited about. Unless you want savings limits and expiry dates on your money. > Is this akin to government-backed Venmo, or something? Yes, but even worse.

imtringued 3y ago
>Unless you want savings limits and expiry dates on your money. I don't believe in saving limits or expiry dates in the sense of losing 100% of your money. But think about what impact limiting savings has on debt. In aggregate, there can only be as much debt as there are savings. This means if you want to limit debt in the economy, you are going to have to limit savings as well. This is particularly relevant with debt brakes. A country with a debt brake but without a savings brake is going to run into a pretty fundamental limitation. Savers can delay their spending decisions and this ultimately delays the ability to repay debts but since debtor's are at the mercy of lenders, we blame the debtor for the lenders tardiness.
- nimbleplum40 3y ago
  Savings and debt in an economy are related, but not 1:1. See the money multiplier [1]. [1] https://en.m.wikipedia.org/wiki/Money_multiplier https://en.m.wikipedia.org/wiki/Money_multiplier
  - spiralx 3y ago
    Which, as the article says, is an inaccurate model of how modern monetary economies actually work. Bank loans create new money, they don't lend out existing deposits, and repayments destroy that money. Reserve requirements - in countries that have them - don't affect whether a loan can be made or not.
    - nimbleplum40 3y ago
      > Bank loans create new money, they don't lend out existing deposits Do you mind clarifying? I agree banks create new money, but they do that by lending out existing deposits. A bank can’t lend out money that don’t have on their books…

bhdlr 3y ago

> > Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year. > Whoa. Is this as awesome as it sounds? Is this akin to government-backed Venmo, or something? No, under the hood it's a government Blockchain

everfree 3y ago
Does it use cryptography to digitally sign its messages?

TRiG_Ireland 3y ago

So, almost like SEPA, but not as good, as not all banks are in it? I can type anyone's IBAN* into my banking app and transfer them money pretty much instantly. However, ours will have a delay outside banking hours, which is annoying. Sounds like FedNow is always instant, which is a definite improvement. * Any IBAN from a SEPA country, at least.

pragmatick 3y ago
"Normal" SEPA isn't instant either. You need SEPA Instant Payments for that and many banks don't support that yet although an EU directive is supposed to make it mandatory to at least be able to receive them, I think.
Nemo_bis 3y ago
A large portion of SEPA bank accounts can now use TARGET Instant Payment Settlement (TIPS) on TARGET2/T2. https://www.ecb.europa.eu/paym/target/tips/html/index.en.html https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm... My mid-sized Italian bank has a promotion right now to make instant payments with only 1 € in fees (instead of the usual 7 they charge, or 0 for "normal" bank transfers settled overnight).