Illustration: Rebecca Zisser/Axios
The Fed is developing its own real-time payments and settlement service and reviewing 200 comment letters submitted late last year about the proposal, Fed governor Lael Brainard said in a speech Wednesday.
What's happening: Central banks around the world have been working to issue digital currencies amid a decline in the use of cash and an increase in dependence on commercial banks for payments. Private companies like Facebook and its Libra cryptocurrency also have spurred central banks into action.
Why it matters: "Today, it can take a few days to get access to your funds," Brainard said in her speech. "A real-time retail payments infrastructure would ensure the funds are available immediately — to pay utility bills or split the rent with roommates, or for small business owners to pay their suppliers."
- "Immediate access to funds could be especially important for households on fixed incomes or living paycheck to paycheck when waiting days for the funds to be available to pay a bill can mean overdraft fees or late fees that can compound."
- "To make this possible, it is vital to invest in real-time retail payments infrastructure with national reach."
The big picture: The private sector already is amassing holdings of the public's money that is larger than many banks, she said, highlighting Paypal, Walmart and Starbucks as companies that currently hold billions of dollars of their customers' money on various cards and accounts.
The last word: "Although various federal and state laws establish protections for users, issuers of nonbank money are not regulated to the same extent as banks, the value stored in these systems is not insured directly by the FDIC, and consumers may be at risk that the issuer will not be able to honor its liabilities."
Go deeper: