In a press release, the Federal Reserve Board requested public opinion on a "payment account" that would allow eligible financial institutions, such as Ripple and Circle, to use it for the limited purpose of settling and clearing payments.
The U.S. central bank noted that in recent years, the rapid evolution of the payments sector has led to innovative approaches to banking, and financial institutions with new business models are seeking access to the Federal Reserve's payment services. The Federal Reserve's request for information comes just months after Governor Chris Waller first raised the idea of these payment accounts, comparing them to a "reduced master account."
The Federal Reserve stated that this payment account would be tailored to meet the limited needs of eligible financial institutions seeking payment and settlement services, with the aim of promoting innovation and fostering a secure and efficient payment system. The U.S. central bank added that this adaptation could reduce risk to the payment system and, as a result, payment account requests could generally receive a streamlined review.
It is worth noting that earlier this year, Ripple requested a master account from the Federal Reserve at the same time it was seeking a national bank charter. However, the Federal Reserve has not yet granted this request.
The Federal Reserve explained that a payment account would be distinct from a master account, which is what financial institutions currently use to access the Federal Reserve's payment services. The payment account would not earn interest, would not have access to Federal Reserve credit, and would be subject to balance limits that separate it from a master account.
Furthermore, the Federal Reserve stated that a payment account would not expand or modify the legal eligibility to access its payment services. On the other hand, commenting on this measure, Federal Reserve Governor Chris Waller noted that these new payment accounts would drive innovation while maintaining the security of the payment system. "This information request is a key first step to ensure that the Federal Reserve responds to the evolutions in the way payments are made," he added.
The pro-cryptocurrency senator Cynthia Lummis also issued a statement praising this initiative. She asserted that simplified master accounts will enable responsible innovation and make payments faster, cheaper, and more secure. The senator also mentioned that this is a significant step to correct the situation after years of Operation Chokepoint 2.0.
The Federal Reserve noted that the comment period for the proposed payment accounts will close 45 days after their publication in the Federal Register.
