Fed considering a new account for payments innovators

Zoom in: "I believe we can and should do more to support those actively transforming the payment system. To that end, I have asked Federal Reserve staff to explore the idea of what I'm calling a 'payment account,'" Waller said Tuesday morning at the Fed's Payment Innovation Conference.

• "The ideas to tailor the services of these new accounts to the needs of these firms and risks they present the Federal Reserve Banks and the payment system accordingly, and importantly, these lower risk payment accounts would have a streamlined timeline for review."

How it works: Today, firms innovating in the payment space tend to work with a third-party bank that has access to a Fed master account.

• At least one crypto-forward bank has been struggling with the Fed for years to get a master account.
• With a payment account, or "skinny master account," as Waller called it, the Fed would not pay interest on balances. The accounts may also have a cap on the size of balances, would not have overdraft cushions and would not provide access to borrowing from the Fed's discount window.

• Lots of companies have been lining up to apply for banking charters to serve the digital-asset sector, including Coinbase, Circle, Stripe and, most recently, Sony.

What's next: Waller stressed that this is now "just a prototype idea."

• "We will engage with all interested stakeholders to hear their perspectives on the benefits and drawbacks to this approach. So you will be hearing more about this shortly," he told those in the room.