Banks are raising alarms about potential changes to the Federal Reserve's account access policies, particularly regarding the introduction of alternative account types that could undermine financial stability.Federal Reserve Governor Christopher Waller announced plans for "payment accounts" aimed at enhancing payment innovations, but banks caution against relaxing standards that have historically safeguarded the financial system's integrity.
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bpi.comThe Federal Reserve has traditionally granted master accounts to insured depository institutions, which are subject to stringent oversight and capital requirements.This has helped to minimize risks such as credit, settlement, and monetary policy risks.However, the proposed payment accounts would expand access to a broader range of institutions, potentially including those that do not meet the same rigorous regulatory standards.
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bpi.comfederalreserve.govIn December 2025, the Federal Reserve issued a request for information (RFI) to gather public input on the proposed payment accounts.This move seeks to explore how the Fed can adapt its account access framework in light of evolving payment technologies.However, banks are concerned about the implications of allowing less-regulated entities to access Fed accounts, which could lead to significant risks such as the drawing away of deposits from commercial banks, and operational failures that could disrupt critical payment systems.
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bpi.comThe risks associated with broadening access to payment accounts include:.Credit Risk: Institutions that overdraw their accounts could create financial instability for the Federal Reserve and the broader financial system.Settlement Risk: If a new account holder faces operational failures, it could impede the processing of transactions across the payment network.Financial Stability Risk: Less regulated institutions might siphon deposits from traditional banks, leading to liquidity issues.Compliance Risks: There is also the potential for these accounts to be misused for illegal activities, increasing the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) risks.
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bpi.comHistorically, the Federal Reserve's master accounts were limited to federally insured banks, which adhere to strict requirements regarding capital, liquidity, and consumer protection.This regulatory framework has been instrumental in maintaining a stable banking environment.However, the expansion of account eligibility to non-insured institutions introduces a level of risk that banks argue could destabilize the financial landscape.
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bpi.comfederalreserve.govIn light of these concerns, banks advocate for the establishment of robust safeguards if payment accounts are introduced.These safeguards might include limits on the size of overnight balances and stringent criteria for approving access to ensure that only institutions with adequate risk management practices can obtain such accounts.
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bpi.comFurthermore, banks emphasize that any regulatory changes should be made cautiously, drawing lessons from past financial crises where regulatory weaknesses contributed to economic downturns.Historical evidence shows that during periods of regulatory relaxation, risk-taking among financial institutions tends to increase, leading to greater vulnerabilities in the system.
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federalreserve.govThe Federal Reserve's consideration of payment accounts marks a significant shift in its approach to account access.As the Fed moves forward, the balance between innovation in financial services and the need to maintain a stable banking environment will be crucial.The feedback from banks and other stakeholders will play a key role in shaping the final regulatory framework, emphasizing the need for a cautious approach to protect the integrity of the US financial system.
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bpi.comfederalreserve.govIn conclusion, while the introduction of payment accounts could foster innovation in the financial sector, banks are urging the Federal Reserve to proceed with caution to ensure that financial stability is not compromised.A careful evaluation of the risks involved and the implementation of appropriate safeguards will be essential in navigating this potential shift in account access policy.
