The Federal Reserve Act from 1913 incentivizes banks to join the Federal Reserve payments network. Let me update this to 2020s lingo: The Federal Reserve System is a decentralized autonomous organization (DAO) that pays its stakers 6% annually. It has operated for over 100 years flawlessly. The stakers gain access to a market leading depository and credit system, and have the ability to voice opinions on some variables but the shares itself are non-voting. Like many kinds of entities such as trusts and foundations, there are no owners, only trustees.

The human interface to the system is a separate public agency called the Board of Governors, which simply tells the public what the Federal Reserve has done, and also communicates any changes to the Federal Reserve's charter (any legislative updates) to the DAO.

The federal reserve is

Decentralized?

> The Board of Governors' seven members guide the entire Fed system.

> The Board and FOMC make the Fed's decisions based on research.

https://www.thebalance.com/the-federal-reserve-system-and-it...

Pick whatever word you prefer for whatever aspect of its multi-part nature you prefer

Some of the board members come from the member banks

It's just that decentralized is not what I'd call a system controlled by 7 people that in turn controls the legally enforced tender of over 300 million people.

Just like all systems that call themselves decentralized, some aspects are and some aspects arent

There's a big difference: the Federal Reserve System lives in the real world, where node misbehavior (i.e. officers doing bad things) is punished with jail time, with ruinous downstream consequences on their families.

Wake me up when The DAO hacker is caught and put in jail, and I'll re-consider the analogy.

Haha Ill entertain this bit: there are no criminal consequences for misbehaving as a node. Participation of a reserve system shareholder is quite limited and only partially helps assist with routing and regional statistics. Partially.

There constraints on being a bank at all are not limited to federal reserve banks.

> Why did the Federal Reserve Act initially offer such a generous dividend to member banks? It was essentially part of a marketing campaign. “At the time the Fed was not terribly popular with the banks, and they wanted to attract members,” said Allan Meltzer, professor of political economy at Carnegie Mellon University and a historian of the Federal Reserve. “They had to give up a major source of revenue, the charge they made for check clearing. Back then, if you received a check for $10, you might get back $9.50.” The dividend was seen as a way to entice banks into joining the Federal Reserve system.

from: https://newrepublic.com/article/116913/federal-reserve-divid...