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Chair Kevin Warsh arrived at the Federal Reserve last month with an agenda for change in the central bank’s communications. Talk less. Replace granular forward guidance with a durable policy framework. And, according to news reports, scale back or even scrap the dot plot – the policy-rate projections in the quarterly Summary of Economic Projections (SEP), which also collects FOMC participants’ forecasts for inflation, unemployment, and growth.

Chair Warsh’s diagnosis of the Fed’s shortcomings raises a question: if the Fed needs a new, clear policy framework, how does a prescription for saying less make sense? In our view, transparency and communication are not the same thing. Transparency is how much the Fed discloses; communication is whether what it discloses conveys an understanding of its reaction function — the relationship between economic conditions and the path of the policy rate. The two can move in opposite directions — if the extra material is noise, a central bank can disclose more yet communicate less. In that sense, Warsh is right that more talk is not the goal in itself.

But the best remedy for an imperfect policy framework is clearer communication of the actual reaction function. That requires disclosing more of what matters and less of what does not, allowing Congress and the public to hold the Fed accountable for its legal mandate.

Money is a confidence trick. When you tap a card, swipe a phone, or send a wire, you move a claim on a commercial bank. You expect others to accept that claim at par — you send a dollar, euro, pound, or yuan, and they receive one. The claim settles and life goes on.

This apparent simplicity conceals an elaborate architecture. Commercial bank deposits circulate at par with central bank money (reserve liabilities) because a complex legal and institutional framework makes the parity credible. Prudential regulation constrains bank risk-taking. Supervision enforces the constraints. Deposit insurance reduces the incentive to run (or to panic). The lender of last resort keeps solvent banks liquid when private funding evaporates. Settlement in central bank money anchors the payment system. Each element reinforces the others. Start stripping them away and private liabilities like bank deposits will stop functioning as money.

Stablecoin advocates ignore these essential foundations. They point to asset backing — in some cases, with quality determined by legislation like the GENIUS Act — and a programmable ledger, and stop there. That is not enough. General acceptance of private money — digital or otherwise — depends on functions that only a central bank can provide. Tokenized deposits inherit this institutional support; stablecoins do not. That is why tokenized deposits will likely dominate stablecoins outside the crypto ecosystem (see here).