Feb 6, 2020 - Economy & Business

The Fed continues its digital currency push

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:

Go deeper

Tug-of-war over how banks should give back to poor communities

Illustration: Eniola Odetunde/Axios

Washington, Wall Street and Main Street are at war over regulatory changes based on a law that requires banks to invest in needy neighborhoods and lend to lower-income consumers.

Why it matters: A lot of money is at stake, and neighborhoods across the country could suffer or prosper depending on how (or if) the regulations are changed.

Go deeperArrowJan 28, 2020

Big Finance is having its climate moment in 2020

An Extinction Rebellion activist stands on top of the Wall Street Bull during an Oct. 7 protest. Photo: Erik McGregor/LightRocket via Getty Images

Big Oil often takes center stage, but big finance is having its climate moment this year, between the 2020 presidential elections and events at Davos.

Why it matters: It's the latest sign of how Wall Street is increasingly at the center for climate advocacy in at least two ways — and how White House hopefuls are part of those efforts.

Go deeperArrowJan 23, 2020

Varo gets long-awaited FDIC nod of approval

Illustration: Rebecca Zisser/Axios

The FDIC has given Varo Money its official seal of approval, according to Varo CEO Colin Walsh.

Why it matters: It's the crucial second step for Varo to become a national bank, following the Office of the Comptroller of the Currency granting its own preliminary approval back in October.