The U.S. Federal Reserve has taken the first step toward establishing a more limited version of so-called master accounts, welcoming input on how the central bank could develop a “settlement account” that would give companies access to its payments rails without cutting off significant effort to provide richer services.
The Fed said in a statement Friday that it is seeking information on how to respond to requests from businesses that rely on new technologies to more easily use services “for the express purpose of clearing and settling payments activities of financial institutions,” according to a board memo on the initiative. The public comment period is 45 days.
The Fed’s master account is a direct conduit for financial institutions to the central bank’s payment rails. They can be difficult to obtain, making it difficult for some crypto companies.
“These new payment accounts will support innovation while keeping our payment system secure,” Governor Christopher Waller said in a statement. “This request for information is an important first step in ensuring the Fed is responsive to evolving payment methods.”
Waller has previously expressed support for the idea, pitching it as a “skinny” master account in October. Under Friday’s clarification, the accounts would not pay interest, would be given access to credit from the Fed and would have balance limits.
Michael Barr, a Democratic appointee who served as the Fed’s regulatory chief until President Donald Trump’s administration, said he opposed the request because it was “not specific enough about safeguards to protect accounts used for money laundering and terrorist financing by institutions we do not oversee.”
