The U.S. Federal Reserve took an initial step towards creating a more restricted version of its master accounts, seeking feedback on how the central bank may design “payment accounts” that allow access to its payment infrastructure without firms needing to navigate the complex requirements for more extensive services.
The Fed announced in a statement on Friday that it is gathering information on how to fulfill incoming requests from businesses that use new technologies to more easily utilize services “specifically for the purpose of clearing and settling the institution’s payment activity,” according to a board memo on the proposal. The public will have 45 days to comment.
Fed master accounts serve as direct links for financial institutions to the central bank’s payment systems. Obtaining them can be challenging, which has been an issue for some cryptocurrency companies.
“These new payment accounts would foster innovation while maintaining the safety of the payments system,” stated Governor Christopher Waller. “This request for input is a crucial first step to ensure that the Fed is adaptable to changes in payment methods.”
Waller had previously supported the idea, referring to it as a “skinny” master account in October. According to Friday’s descriptions, these accounts would not earn interest, would not provide access to credit from the Fed, and would have balance limits.
Governor Michael Barr, the Democratic appointee who previously served as the Fed’s regulatory chief until the Trump administration took office, expressed his opposition to the request, arguing that it lacks sufficient specifications regarding safeguards to prevent misuse of the accounts for money laundering and terrorist financing by entities not under our supervision.
