The Clearing House Association, together with the Bank Policy Institute and the Financial Services Forum (the “Associations”) responded to the Federal Reserve Board’s Request for Information on a proposed special-purpose “Payment Account.” The Payment Account would be tailored to the risks and needs of institutions focused on payments innovation and allow those institutions to clear and settle transactions on behalf of their customers on the central bank’s balance sheet.

The Associations emphasized that access to Reserve Bank accounts has historically been conditioned on comprehensive federal regulation and supervision to safeguard financial stability. Expanding access to institutions not subject to consolidated federal prudential oversight would have potential systemic consequences, including increased run risk, disintermediation from insured banks, and broader financial stability concerns.

The Associations call for a deliberate, risk-based review process, including public notice and comment, extended review timelines, transparency around approvals, and consistent standards across Reserve Banks to prevent regulatory arbitrage or inconsistent precedent.

While the Associations support the proposed limitations on Payment Accounts, such as balance caps, denial of discount window access, and no payment of interest on balances, they urged that additional limitations are needed. These include restrictions to real-time monitored payment systems, prohibitions on third-party or correspondent uses, and enhanced BSA/AML, cybersecurity, capital, liquidity, and operational risk controls. To see the full response click here.