Bye-Bye Banks?
As we noted earlier today, the Federal Reserve Bank of Atlanta’s digital-payments paper is startling in its conclusion that under-served consumers would do better without banks.  Perhaps banks deserve rebuke, but it’s unusual for a Federal Reserve Bank to pooh-pooh the benefits of regulated banks instead of deciding how best to add yet more regulation.  Another unwritten law of central banking is agnosticism about the relative merits of market competitors other than when it comes to safety and soundness.  In part because they are so ground-breaking, the Atlanta Fed’s recommendations will make a difference given that the Biden campaign espoused postal banking, Democrats favor “Fed accounts”, and the OCC plans new payment charters.  Now, advocates for these ideas and more than a few others have a Federal Reserve Bank at their back.