Industry Groups Urge Caution on Fed's Special-Purpose Accounts Plan

The Bank Policy Institute (BPI), The Clearing House Association, and the Financial Services Forum have submitted a joint comment letter to the Federal Reserve on its proposed revisions to the Payment System Risk policy. The proposal would allow special-purpose accounts that clear and settle certain payment activity. The Associations appreciate the Federal Reserve's efforts but express concerns about the potential effects on financial stability.

The Associations support responsible innovation but recommend commensurate safeguards and controls. They strongly advocate for retaining two key controls proposed by the Board: limiting access to the FedACH Service and not paying interest on balances in Payment Accounts. These measures would mitigate risks to the Reserve Banks and the overall payments system.

The Associations propose that within one year of finalizing the proposal, the Federal Reserve conduct a comprehensive assessment of the systemic impact of Payment Accounts on the payments system, monetary policy implementation, and financial stability. They also recommend ensuring transparency in account access standards and consistently applying them across Reserve Banks.