Powell: Fed Will ‘Make Progress’ on Master Accounts for Nonbanks

Federal Reserve Chairman Jerome Powell told members of the Senate Banking Committee today that there are “good arguments” for granting non-FDIC-insured special-purpose depository institutions Fed master accounts and that the Fed will “make some progress” on the issue.

Powell added that the Fed is taking time to consider the SPDI applications because of how important these applications are from a precedential standpoint. “We start granting these, there will be a couple hundred of them pretty quickly and we have to think about the broader safety and soundness implications,” said Powell.

Asked by Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) about whether a central bank digital currency should being developed to enable consumers to have retail accounts with the Fed, Powell confirmed that the Fed does not have the experience or capability to do so. If the Fed were authorized to pursue a digital currency, Powell also confirmed that it should not prevent a privately issued stablecoin from existing with the central bank digital dollar.

During the hearing, Powell also provided an update on a highly anticipated report from the Fed on central bank digital currencies, noting that it is “ready to go” and would be released “in coming weeks.” While Powell said the Fed “[does]take some positions” in the paper regarding CBDCs, he said it will mostly focus on asking questions and seeking input from the public.