Board of Governors of the Federal Reserve System

I support seeking comment on today's proposal for a limited-purpose payment account, as I believe it sets forth a structured framework that could both create a clear mechanism for implementing innovative business models and mitigate key risks to individual Reserve Banks.

Since the Board issued the 2022 account access guidelines, we have seen significant evolution in the types of institutions seeking accounts, their business models, and the services they offer. Reserve Banks have also gained further experience with considering requests for account access from special-purpose depository institutions. With the benefit of this experience, I support our effort to develop transparent, tailored standards for special-purpose payment accounts to support financial innovation in a responsible, risk-focused manner.

The proposed payment account would provide eligible institutions with the ability to clear and settle payment transactions on behalf of their customers. However, given the important risks that account access can pose both to individual Reserve Banks and the System as a whole, any expansion of direct access to Federal Reserve financial services requires careful and ongoing attention to the risk profiles of the requesting institutions and the potential systemic implications.

I particularly welcome views, data, and perspectives from commenters on striking the appropriate balance between removing unnecessary barriers to innovation, while also protecting the integrity of our payment system. For example, I particularly welcome comments from the public about the systemic impact of granting clearing and settling capabilities to legally eligible firms without deposit insurance and not subject to comprehensive federal oversight. Further, while the proposals specify terms that Reserve Banks may apply to address illicit financial risk, I particularly welcome comments from the public on other approaches to more robustly minimize such risks.

I would like to thank staff for their efforts and the public for their interest. I look forward to reviewing the comments we receive and working with my colleagues to support financial innovation, while protecting the integrity of our payment system.