While they can technically accept money without being a fed member, they must keep that money with a fed member.
They need to keep money (printed by the fed) with a bank controlled by the fed. If you don’t see why that is a centralized system then not sure there’s much to discuss.
It’s distinct from reserve requirement, which doesn’t force you to store your money with a member of a single organization.
So, if they had auditors to check that banks comply with the reserve requirements (instead of requiring them to hold a deposit somewhere), the banking system would cease to be centralised? Is that what you're saying?
And what about a smart contract that requires participants to make a deposit with the smart contract itself? According to what you're saying such smart contracts are by definition centralised. Am I getting this right?
That would be less centralized, yes. The fact that one organization, the fed, has the unilateral and exclusive authority to create more money (essentially unlimited) would still be a very important point of centralization though.
> And what about a smart contract that requires participants to make a deposit with the smart contract itself?
What do you mean "requires"? Is there forced participation? Presumably anybody could make a competitor to this smart contract. I think I'd need a more specific example to understand exactly what you mean here.
It also depends on the contract itself. A contract that has an owner encoded into it who can make unilateral decisions is more centralized than an ownerless / immutable one.
They need to keep money (printed by the fed) with a bank controlled by the fed. If you don’t see why that is a centralized system then not sure there’s much to discuss.
It’s distinct from reserve requirement, which doesn’t force you to store your money with a member of a single organization.