Investing.com — Federal Reserve Governor Christopher J. Waller announced plans to explore a new “payment account” concept for financial innovators during the Fed’s first Payments Innovation Conference on Tuesday.
The proposed accounts would offer basic Federal Reserve payment services to legally eligible institutions that currently operate through third-party banks with full master accounts. Unlike traditional master accounts, these “skinny” accounts would not pay interest on balances, might include balance caps, and would not provide daylight overdraft privileges or discount window access.
“Payments innovation moves fast, and the Federal Reserve needs to keep up,” Waller said in his opening remarks. He emphasized that the streamlined accounts would have faster review timelines while still controlling risks to the Federal Reserve and payment system.
The conference marked a significant shift in the Fed’s approach to financial technology innovators, with Waller explicitly welcoming participants from the decentralized finance (defi) industry. “This is a new era for the Federal Reserve in payments — the defi industry is not viewed with suspicion or scorn,” he stated.
Waller highlighted how technological advances including stablecoins, tokenized assets, distributed ledger technology, and artificial intelligence are transforming payments. He noted these innovations are no longer “on the fringes but increasingly are woven into the fabric of the payment and financial systems.”
The Fed is conducting research on tokenization, smart contracts, and AI applications for its own payment systems while exploring how to better support private sector innovation.
Waller said Federal Reserve staff will engage with stakeholders to gather perspectives on the payment account proposal as they develop the concept further.
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