The Federal Reserve has reached the 120-day deadline set by a May 19 executive order to report on potential access to Reserve Bank payment services for nonbanks and uninsured depositories. The White House requested an analysis of legal barriers, regulatory options, and recommendations regarding direct access to central bank infrastructure.
Fed Governor Christopher Waller stated in an August 31 letter that the Federal Reserve lacks the authority to expand legal eligibility for account access. He noted that any such extension to currently ineligible nonbank firms would require legislative action by Congress. It remains unclear if a formal report was submitted to the White House.
Separately, the Fed is reviewing the OP-1878 proposal, which aims to create special-purpose accounts for institutions that are already legally eligible. This initiative would allow access to services like FedNow and Fedwire Funds, while excluding others such as FedACH. The proposal has already received 100 public comments from various industry stakeholders.
The debate centers on whether payment firms should bypass third-party intermediaries to connect directly to the Federal Reserve. While some fintech entities advocate for direct access to improve efficiency, traditional banks have raised concerns regarding increased competition and potential regulatory disparities between different types of financial institutions.
