Fed proposes limited payment accounts for fintech firms

Investing.com -- The U.S. Federal Reserve proposed Wednesday a new type of payment account designed for firms such as fintechs, allowing them to move money across the Fed's payment infrastructure while offering fewer protections than traditional bank accounts.

The proposed accounts would exclude access to intraday credit and the Fed's discount window, and firms would not earn interest on reserves held at the Fed, the central bank said in a statement.

The proposal follows earlier work by the Fed examining these streamlined accounts as it seeks to expand access to its payments infrastructure while limiting potential risks to the financial system.

The proposal would not expand or change legal eligibility requirements for Fed account access, according to the central bank.

The Fed also said it is encouraging Federal Reserve Banks to pause decisions on granting nontraditional accounts until it completes work on the new policy.

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