Federal Reserve Opens Public Comment on Payment Account Plan

The Federal Reserve has asked for public comment on a proposed “payment account” that would give eligible financial institutions restricted access to central bank payment systems. According to a Dec. 19 press release, the account would exist solely to clear and settle payments, without granting the broader privileges that come with a traditional master account.

The proposal reflects growing pressure on U.S. payment infrastructure as instant settlement becomes more common. However, the Fed stressed that the concept does not change who qualifies for Federal Reserve accounts under existing law. Instead, it introduces a narrower option designed to reduce risk while supporting faster payment flows.

The public comment request was published alongside detailed questions about account design, safeguards, and potential impacts on the financial system. The comment period will remain open for 45 days after publication in the Federal Register.

What the proposed payment account would allow

Under the proposal, a payment account would permit eligible institutions to hold balances at a Federal Reserve Bank only for payment clearing and settlement. The account would not support lending, investment activity, or broader balance management functions.

The Fed said the account would exclude key features of a master account. It would not pay interest, would not provide access to the discount window, and would not allow daylight overdrafts or intraday credit. Instead, transactions would rely on automated controls designed to prevent overdrafts.

The account would also face balance limits. Fed staff outlined a proposed overnight cap set at the lower of $500 million or 10% of the institution’s total assets, based on regulatory reporting or equivalent measures. The limit aims to keep the account focused on settlement activity rather than reserve accumulation.

Why the proposal matters beyond traditional banking

The Fed framed the request as part of its broader effort to modernize payment infrastructure while maintaining safety and stability. Services under consideration include Fedwire Funds, the National Settlement Service, FedNow, and limited Fedwire Securities transfers without payment.

Although the proposal does not mention digital assets, it has drawn attention from fintech and crypto-adjacent sectors. Many payment and tokenization models depend on rapid settlement, and access to central bank rails has long been a structural barrier. The Fed made clear, however, that the payment account does not expand eligibility to non-bank entities.

Internal debate has also surfaced. Some policymakers raised concerns about oversight and safeguards, especially for institutions that may not fall under full federal supervision. Those concerns appear reflected in the detailed questions posed to commenters about risk controls, compliance, and financial integrity.

The Fed emphasized that the initiative is exploratory. Public feedback will shape whether the payment account moves forward and how it might be structured. For now, the proposal signals a cautious step toward faster settlement, while stopping short of broader reforms tied to digital assets or central bank digital currencies.