Just imagine if the Federal Reserve started their own cryptocurrency, created a FedChain, blessed the banks to use it, ect. I can't imagine the limitations on it, but I am sure they would be bad. Probably would be a way for the feds to create their own coins in the protocol.
They would probably replace "free mining" with a requirement that a completed block also be submitted to the fed for approval/validation and then digitally signed by the Fed, before being awarded, and a portion of the block reward has to be going back to the fed as the fed's fee, so the fed decides which bank (or that the fed itself) is going to successfully mine the next block.
The fed could then be enabled to specify FedCoin reward for mining, difficulty parameters, and "fed's fee" parameters centrally, for each individual block, instead of letting a distributed algorithm decide the mining parameters.
The fed's ability to reduce difficulty, increase reward ("liquidity infusion"), or increase fed's fee for the block taken from the reward ("liquidity removal"), then lets the fed influence money supply.
Also, at any point in time, the fed can decide that the next block and the next 10% of the blocks will be won by the specified bank -- .e.g. the fed, regardless of hashing power, and have a specially magnified award.
