Federal Reserve Governor Christopher Waller yesterday sought to clear up confusion about his proposal for the creation of “skinny” master account by saying the accounts would only be made available to chartered depository institutions.
Waller last month proposed the creation of a “payment account” to provide basic Fed payment services to legally eligible institutions that conduct payment services. Such “skinny” accounts would have a streamlined approval process. Speaking yesterday at a Bank of Canada conference, Waller said the accounts would only be available to eligible depository institutions.
“You have to have a bank charter to do this,” Waller said. “So if you’re not a bank, you don’t have a bank charter, you don’t have the right to ask for one.”
Waller said he proposed the payment account because he didn’t believe it made sense for the Fed to have a single master account for every bank, given the sector’s wide range of business models. A payment account, for example, may not pay interest on the account or allow access to the Fed discount window.
“If you’re a Tier 1 bank, you get the gold medal, you get the full-service luxury master account,” he said. “If you come down a notch, you’ve got a few other issues that we’re concerned about, we could shrink the properties of the master account and what you can do using that account.”
