Read on Twitter
Thread: "What I always find puzzling when we talk about this is, why, given that history, people now believe that the payments system is a government service.” Badly-needed perspective on FedNow from @BrianBrooksOCC https://www.americanbanker.com/news/occs-brooks-questions-need-for-government-owned-payment-systems
Brook's sober and sound perspective brings to mind the Senate hearing on faster payments I took part in last September. My testimony here: https://www.cato.org/publications/testimony/facilitating-faster-payments-us
I bristled then when, in his opening statement arguing for FedNow, Ranking Member Sherrod Brown began by saying "we can’t allow corporations to take over critical public infrastructure, so they can squeeze more profits out of working families." https://www.banking.senate.gov/imo/media/doc/Brown%20Statement%209-25-19.pdf
The "corporation" Senator Brown was assailing here (actually an association) was TCH (formerly the New York Clearing House), which runs RTP--a private real-time retail payments service established in 2017. https://www.theclearinghouse.org/payment-systems/rtp
Far from "taking over" something the government had been providing, RTP is this country's first (and so far its only) potentially ubiquitous bank-based real time retail payments network. TCH began work on the system some years before, having been encouraged to do so by the Fed.
It's proposal earned the highest grades from Fed's Faster Payments Task Force. https://fasterpaymentstaskforce.org/wp-content/uploads/tch-fis-vs.pdf. Among the plan's provisions was a flat-fee pricing schedule--no quantity discounts favoring larger banks.
The Justice Dep't also determined saw no monopoly risk in TCH's proposal, though as usual it "reserve[d] the right to bring an enforcement action ...if the actual operation of the proposed conduct proves to be anti-competitive in purpose or effect." https://www.justice.gov/atr/page/file/998201/download
So there's not a speck of truth to the suggestion that TCH or any private outfit sought to "take over" any critical payments infrastructure. Instead, they provided needed infrastructure that was sorely lacking, and did so with the Fed's blessing.
If anyone has tried to muscle-in on anyone's turf, it was the Fed itself, which stunned TCH and others by suddenly announcing, in October 2018, that it was contemplating setting up a rival real-time system to compete with RTP: https://www.paymentsjournal.com/wait-what-did-the-fed-just-say-about-real-time-payments/
Finally, TCH has been providing payments infrastructure and services since 1853, far longer than the Fed. And it has a record Fed officials might well envy, including doing a better job handling financial panics than the Fed did during its first decades! https://eh.net/encyclopedia/banking-panics-in-the-us-1873-1933/
So, let's not have any more nonsense about how only the gov't is fit to provide payments services. Like ancient despots' claim that they alone were fit to coin money, it has no sound basis in theory ( https://eh.net/encyclopedia/greshams-law/), though it is perfectly self-serving.
