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0 pointsjqpabc1238mo ago0 comments

All the liability on what?

Fraud. Banking liability rolls uphill. When a commercial bank fails, who picks up the pieces?

Commercial banks can be easily replaced? How so?

https://www.frbservices.org/financial-services/fednow

For transaction settlement, commercial banks are really just intermediaries. They swap numbers all day and at the end of the day, they tell the Fed's computers how to settle things among banks.

FedNow let's the Fed's computer settle things directly on the fly, 24/7/365. It's really a CBDC implementation that cuts commercial banks into the mix mainly for the sake of tradition.

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iluxonchik8mo ago· 1 in thread

FedNow is a real-time payment system for interbank transfers - it doesn't replace commercial banks.

Commercial banks are credit, lending, deposit-taking and risk management institutions. FedNow focuses on settlement. Replacing commercial banks would require public access to central bank accounts, which isn't allowed under virtually all jurisdictions.

Regarding fraud - automation won't remove fraud. Banks themselves heavily rely on automation.

Regarding bank failure handling - same question as above

toomuchtodo8mo ago

If I can make instant payments from say, a digital wallet (TransferWise, for example) using instant payment rails, why do I need a bank? If I need credit, but can get that credit from a non bank, why do I need a bank?

Stablecoins enable this without central bank and commercial bank infrastructure permissioning (the biggest US banks own Early Warning Systems [Zelle] and The Clearing House [RTP]; the Federal Reserve was instructed by Congress to build FedNow so these largest banks could not block smaller banks from financial infra access). Instant payment rails, value backed by sovereign debt, sovereign debt backed by central banks.

Is your argument that we cannot live without fractional reserve lending enabled by commercial banks? Because private credit and ABS based credit is an example to the contrary. Consumer or commercial deposits are unnecessary to extend credit. Fraud risk is straightforward to manage, using either in house or vendor technologies, within the scope of deposit and banking product fraud detection and mitigation.

Matt Levine: Stablecoins Make Banking Narrower - https://www.bloomberg.com/opinion/newsletters/2025-10-02/sta... | https://archive.today/9jJmE - October 2nd, 2025

Private Credit Wants to Be the Bank - https://www.bloomberg.com/opinion/articles/2024-12-19/privat... | https://archive.today/MO2kf - December 19th, 2024

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