Now that I think of it this would make sense for the FED to actually use the blockchain tech to manage its currency supply. Instead of the printing press they issue cryptodollars which supposedly are better than paper because they can be easily and fastly moved around or whatever. But not for a 3rd party to just say: This is a dollar, but called differently, trust us, we issued it.
Correct.
> Otherwise they're printing money isn’t it?
Correct.
> Even if true, saying that they back it up is not enough.
Right. The original idea was that they would provided audited statements proving they held the necessary reserves. They did start out doing something like this, as described here:
https://medium.com/@bitfinexed/the-so-called-tether-audit-th...
See the screenshot of their "previous release" which showed reserves of $44 million across seven banks.
However, for various reasons, including avoiding regulations which would make running this kind of business much more difficult, subsequent releases were less specific and suffer from a host of issues described in the above article. Nevertheless, the latest release mentioned in the article did show $442 million of reserves backing Tethers.
You're correct that the Fed could certainly use a blockchain. However, there's nothing wrong in principle with the idea of a 3rd party issuing a token representing a dollar, if they provide appropriate auditing and comply with regulations in a respectable jurisdiction. No-one is currently doing that.