Fed Deadline Passes as Payment Access Debate Continues
For payments firms, direct access to the Federal Reserve can remove an intermediary from the chain between a transaction and settlement. For banks, expanding that access raises another question: Which firms should be allowed to connect directly to central bank infrastructure, and under what regulatory conditions? Those questions are now sitting with Washington. A May […] The post Fed Deadline…
The deadline set by an executive order for the Federal Reserve to examine access to payment accounts and services by uninsured depository institutions and nonbank financial companies has passed without a public report. The order, issued on May 19, asked the Fed to consider legal barriers, potential regulatory or legislative options, and the account decision-making processes of the 12 Reserve Banks.
The Fed's role in this process is to assess the financial, operational, and compliance risks of institutions seeking direct access. As of Sept. 16, it was unclear whether the Fed had submitted a report to the White House. Current law limits who can apply for access to Reserve Bank accounts, with eligibility generally confined to member banks, depository institutions, and U.S. branches and agencies of foreign banks. Nonbank financial companies often do not meet these criteria.
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