Federal Reserve Governor Christopher Waller said he’s hearing concerns from banks and crypto-focused firms on his efforts to authorize “skinny” master accounts, but the Fed still plans to finalize them this year.
Details: In remarks this week reported by American Banker article (subscription required), Waller noted that while banks want strict oversight and strong safeguards for nonbank institutions, fintechs are seeking access to more Fed services, so he’s working to find a “middle lane.”
ICBA Input: In a comment letter last week responding to the Fed’s request for information on the reserve bank payment account prototype, also known as a “skinny” master account, ICBA told policymakers it has significant concerns about expanding direct Fed account access to institutions that operate outside the traditional banking regulatory framework.
Background:
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The Fed in December requested public comment on the proposed payment account, which eligible financial institutions could use for the limited purpose of clearing and settling their payments on Fed payment services, such as FedNow and Fedwire.
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The RFI followed Waller’s October speech previewing the idea of a “skinny” master account that would provide basic Fed payment services to legally eligible institutions.
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Nonbank entities and crypto institutions are trying to obtain access to master accounts—industry settlement accounts that are traditionally limited to insured depository institutions that are highly regulated and pose limited risk to the banking system.
More ICBA Advocacy:
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As reported in Independent Banker magazine, ICBA supports limiting Fed account access to institutions that meet the financial services sector’s highest standards to protect the safety of the U.S. banking system.
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In a friend-of-the-court brief last year, ICBA told a U.S. appellate court that federal law provides the Federal Reserve Banks with the discretion to deny or grant master account access.