The Federal Reserve is considering the introduction of a “skinny” master account, which would provide basic payment services to fintech companies and other providers that currently rely on third-party banks, according to Governor Christopher Waller.
Speaking at the Fed’s first Payments Innovation Conference, Waller noted that this “payment account” could be advantageous for firms focused on payment innovation, particularly those that may not require the full features of a traditional master account.
This account would allow access to the Federal Reserve’s payment systems while omitting certain functionalities. For instance, it would not earn interest on balances, could impose balance limits, and would not include daylight overdraft privileges or access to the discount window.
Waller explained, “The idea is to tailor the services of these new accounts to the needs of these firms and the risks they present to the Federal Reserve Banks and the payment system. Accordingly, these lower-risk payment accounts would have a streamlined timeline for review.”
Fed staff are currently exploring this concept and will consult with stakeholders to gather insights on its potential advantages and challenges.
Penny Lee, CEO of the Financial Technology Association, expressed support for the initiative: “We look forward to collaborating with the Federal Reserve Board on this proposal and believe that giving well-regulated payment innovators access to the federal payment infrastructure is crucial for America’s financial future.”
In his speech, Waller also emphasized a “new era” for the Fed in payments, highlighting the growing prominence of stablecoins, tokenization, and AI. He mentioned that the decentralized finance (DeFi) sector is increasingly recognized as part of the broader payment and financial ecosystem. “The firms involved include banks, asset managers, retail payments companies, technology firms, and crypto-native fintechs, marking a shift in how distributed ledgers and crypto-assets are integrated into financial systems,” said Waller.