Most states have in fact invented bank transfers for that purpose.

The decentralized nature of banks makes it hard to offer a good payment experience to consumers and businesses.

Inside the same country, really? We have the aptly-named Faster Payments in the UK and it's instant. The company I work for is virtually built upon it.

https://en.wikipedia.org/wiki/Faster_Payment_System_%28Unite...

Only in America. The rest of the world figured it out.

To be fair, this is because the US figured this stuff out way earlier through credit cards, and now there's a bunch of stakeholders and legacy changes which get in the way of making the services better.

Indeed, and there are some good reasons, too: US regulators want to prop up smaller regional banks and avoid large national monopolies (for what is essentially a natural monopoly).

The externalities of the crappy US banking system are so vast though. Musk, crypto, ...

SEPA is among the most stable & robust payment areas globally with a lot of interesting features which a lot of other regions are jealous about :-) And there are additional layers built on top, so at least we have N=1, while I have to admit that convenience could & should be improved

The states (or rather the national banks of said states) are usually the ones running the central clearing system. That's the place where all the different banks report their net change in relation to all the other banks, and settle that change on their account with the central bank.

Believe it or not, banks don't ferry around cash to each other. It's all just numbers in a computer.

The Fed has had a wire service (Fedwire) for banks, allowing them to transfer their balances on the Fed’s balance sheet to another bank during settlement, since before the dollar moved off the gold standard. It was initially done with literal telegraphs - not sure at what point it became digital.

It obviously has no pseudo anonymity, is literally the least democratized banking system in existence, and is subject to the government’s whims in a whole host of ways. But it is a digital ledger of massive sums of real dollars (the banks can ask for it in cash if need be), and you couldn’t really steal the money even if you managed to create an unauthorized transfer on some bank’s master account.

So why don't any businesses let me Fedwire them money? It turns out unlike the physical version of cash, this "digital version" has hefty transaction fees and a poor UI meaning no business will take it, unlike how almost all physical businesses will take cash.

That’s not a technical problem - this kind of system can scale out just fine and has in other jurisdictions. SEPA is far from perfect, but is better than Bitcoin for everything but evading governments (justified or otherwise). We’ll see what Fednow looks like in a few years - the banks are definitely dragging their feet and it’s hard to tell what the UX will look like in the end.

> the banks can ask for it in cash if need be

Ehhh, can they? I suspect any bank that tried would pretty soon find that it actually couldn't.

They couldn’t get their whole balance in cash I’m sure. But the Fed is the one that handles retiring old paper currency and giving banks fresh currency to give to ATMs and tellers, and I doubt the inflows and outflows are perfectly even for each bank.

The Fed manages printed currency - they’d be irritated, but they literally do provide the physical dollars people need now, and if they felt it was appropriate, they’d produce them as needed.

Just like those airplanes of bills shipped to Iraq, etc. in the past.

I think we’re talking about bank reserves, which is a fraction (in the order of 1%) of the total amount of money held in the customers’ transaction accounts. Reserves are convertible into cash. Not that any bank would suddenly want to do that, unless there’s a bank run, in which case it’s the customers who want the entirety of their accounts (100x the reserves) converted into cash, which is impossible not because the fed refuses to convert the money, but because the bank doesn’t have enough reserves.