Fed invites input on a pilot 'payment account' to streamline settlement for select institutions

The Federal Reserve Board is seeking public comment on a proposal to establish a dedicated 'payment account' that eligible institutions could use to clear and settle payments. The account would not provide intraday credit or interest and would include automated controls to prevent overdrafts, aiming to reduce costs and speed up payments for evolving business models while managing risks. The plan also contemplates a temporary pause on access decisions for Tier 3 institutions during policy development and notes a higher closing-balance limit. The 60-day comment period follows publication in the Federal Register.