The Federal Reserve Board is requesting public comment on its proposed guidelines to evaluate requests for joint accounts at Federal Reserve Banks by private-sector arrangements within the U.S. payment system. As indicated by the Fed’s recent release, requests for joint accounts usually are intended to facilitate settlement between depository institutions participating in U.S. payment systems. Comments to the Fed must be received by Feb. 21, 2017.
As observed by the Fed, the FRBanks “typically permit a single master account per eligible depository institution.” In the past, the FRBanks opened joint accounts on a limited basis and for specific purposes. These joint accounts have been held for the benefit of multiple depository institutions and have been managed by an agent on behalf of those depository institutions. Noting a growing interest in joint accounts, the Fed explains that, in light of “ongoing developments to improve the U.S. payment system,” it “anticipates interest by industry participants in establishing joint accounts to facilitate settlement.”
Proposed guidelines. According to the Fed’s “Proposed Guidelines for Evaluating Joint Account Requests” (Docket No. OP-1557), the requests “would be evaluated on a case-by-case basis, and evaluating a particular request would likely require more-specific considerations and information based on the complexity of the arrangement and other factors.” Moreover, the proposed guidelines are centered on several core principles, including:
- each joint account holder must meet all applicable legal requirements to have a Federal Reserve account, and the FRBank will not have any obligation to any non-account holder with respect to the account funds;
- the private-sector arrangement must demonstrate that it has a sound legal and operational basis for its payment system;
- the design and rules of a private-sector arrangement must be consistent with the Fed’s policy objectives to promote a “safe, efficient, and accessible payment system for U.S. dollar transactions” and must be consistent with the “intended use” of the arrangement;
- a joint account must not create undue credit, settlement, or other risks to the FRBanks; and
- a joint account must not create undue risk to the overall payment system and must not adversely affect monetary policy operations.
Specific feedback sought. Notably, the Fed is seeking specific comments on certain aspects of the proposed guidelines. The Fed asks:
- What information, if any, about the establishment of an individual joint account should be made public?
- If the FRBanks reserved the right to set limits on balances in joint accounts, to require information on projected balances or volatility of balances, or to further restrict or close joint accounts, how, if at all, would the possibility of such limits affect interest in establishing a joint account, or use of the account once opened?
- Are there other types of restrictions or conditions that, while equally effective in attaining the same objectives, might be less burdensome to a private-sector arrangement if placed on joint accounts once in use?
- Are there additional criteria or information that may be relevant to evaluate joint account requests for U.S. depository institutions to provide services to foreign clearing and settlement arrangements?
- Should the Fed or the FRBanks consider other steps or actions to facilitate settlement for private-sector arrangements in light of market participants’ efforts to develop faster retail payment solutions?
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