Federal Reserve Governor Christopher Waller yesterday sought to clear up confusion about his proposal for the creation of a “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.”
