Thread by @CaitlinLong_

5M views for @RobertKennedyJr’s anti-#CBDC tweet👇. #FedNow isn’t a CBDC but all the criticism from different corners is interesting.

A big issue w/ FedNow=banks don’t have enuf cash to handle the higher liquidity demands of 24/7/365 pymts. Banks need to hold *a lot* more cash!

https://twitter.com/robertkennedyjr/status/1643658603885101073

2/ Yest, while on a podcast w/ @CathieDWood, I said out loud for the first time: #FedNow may not actually launch in July. Banks will need *a lot* more liquidity to handle 24/7/365 pymts, & to raise that cash they’d need to sell assets at loss—which wld reveal the solvency problem

3/ And there’s another reason I said that as well: the sudden but inaccurate groundswell of “#FedNow is a #CBDC” criticism. It’s starting to come from multiple “strange political bedfellow” directions. The #FedNow critics are not wrong abt it in two ways tho:

4/ First, #FedNow does make surveillance of pymts easier than cash (thus politicizing it, as you see from the diversity of critics who are “strange political bedfellows”). Second, it’s a Fed project. Historically the private sector led payment innovations in the US. @GeorgeSelgin

5/ As I recall, the Fed started the project in 2016 with its Faster Payments Initiative (7yrs ago!!!). In the meantime, #stablecoins arose as a private sector initiative organically. The Fed this yr has moved aggressively against private sector stablecoins. Anti-competitive???🤔

6/ I’ll close by adding what I said w/ @CathieDWood yest: to accommodate new #FedNow liquidity need & bank balance sheet reality, Fed’s balance sheet may be $20-25trn in next crisis. Ahead of last crisis I predicted it wld grow to $10trn (it actually topped $9trn). Let’s watch….