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Why the Fed shouldn't compete with private banks

Stephen Moore and Norbert Michel, Washington Times

The Fed has justified its stance based on the notion that “coordination challenges” and “high fixed costs” will prevent other firms from providing competing services with “reasonable effectiveness, scope, and equity.” This strikes us as a highly self-serving analysis that simply justifies the expansion of the Fed’s already enormous independent powers over the banking system. The Fed should stick to its traditional policy and announce that it will remain a neutral facilitator of real-time payments. If it won’t, Congress should intervene in its oversight role and find out why the Fed feels compelled to compete with private banks.