The US Federal Reserve has opened a public consultation on a proposed new type of account that would allow certain eligible institutions to access core payment services without receiving the full privileges of a traditional central bank master account. The proposal introduces what officials describe as a payment account, designed to enable clearing and settlement activities while imposing tighter restrictions on risk, liquidity, and balance sheet exposure. According to the central bank, these accounts would not pay interest on balances held at reserve banks and would exclude access to overdraft facilities. The initiative reflects growing pressure on the Fed to adapt its infrastructure as payment technologies evolve, while maintaining safeguards around financial stability and operational integrity. Institutions without master accounts currently depend on correspondent banking relationships, which can add cost and complexity to payment flows, particularly for newer or specialized financial firms.
Supporters of the proposal argue that limited access accounts could support innovation by providing a clearer pathway into the US payments system for institutions that do not fit neatly into existing regulatory categories. Federal Reserve officials involved in the initiative have emphasized that the goal is to balance modernization with caution, allowing participation without extending full monetary privileges. The consultation also signals ongoing debate within the central bank itself, as policymakers weigh how to accommodate new business models while preserving controls against misuse. Some lawmakers and market participants view the move as a constructive step toward improving efficiency and resilience in payments, particularly as digital settlement technologies gain traction across domestic and cross border transactions.
Critics within regulatory circles have raised concerns that the proposal lacks sufficient detail around safeguards, particularly related to financial crime, supervision, and enforcement. Questions remain about how institutions using the new accounts would be monitored and what standards would apply to ensure compliance with anti money laundering and counter terrorism financing rules. The Fed has acknowledged these concerns, noting that it is exploring additional reporting and risk control requirements as part of the consultation process. Public comments are due within forty five days, after which the central bank is expected to evaluate whether and how to move forward. The outcome could shape future access to the US payments system and influence how central banking infrastructure evolves alongside emerging financial technologies.
