Today, the Board of Governors of the Federal Reserve System released a request for public input and comment on a prototype for special purpose Federal Reserve Bank “payment accounts” that would be available to eligible financial institutions without a full-service Federal Reserve Bank “master account.” This prototype follows Governor Waller’s proposal (available at this link) for these accounts that could be made available by Federal Reserve Banks to entities that are legally eligible for a master account but for which a master account may not be necessary or suitable.
The payment accounts would be used for the “express purpose of clearing and settling the institution’s payment activities.” They would be subject to a common set of “risk-mitigating” limitations, including a prohibition on overdrafts, lack of access to the discount window and an overnight balance limit (potentially the lesser of $500 million and 10% of the payment account holder’s total assets), and absence of interest on overnight balances.
The request for public input and comment is available at this link and an associated summary memo by Federal Reserve staff is available at this link. Responses will be due 45 days after the date of publication in the Federal Register.