In late December the US Federal Reserve opened a request for comment on its “skinny” master account, which it refers to as a “Payment Account”, with the comment period ending last Friday. The proposal’s key features include institutions having no access to credit, balance caps, and the account holder only being allowed to use it for its own purposes, not to provide correspondent banking services.
Traditional finance institutions, digital asset banks and lawmaker Senator Cynthia Lummis all criticized the structure of the balance caps which were proposed to be the lower of $500 million or 10% of assets. The American Bankers Association (ABA) noted that balance caps should be linked to activity rather than assets. A Payment Account holder could potentially have a large volume of payments with relatively small capital. If the cap is too low this could result in payment failures which impact all banks.
Stablecoin issuer Circle largely concurred saying fixed caps risked “potentially throttling otherwise safe, prefunded settlement.” For a stablecoin holder it suggested 10% of the stablecoin supply and requested flexibility during crisis periods. Anchorage Digital, also a stablecoin issuer, preferred removal of the caps. Senator Lummis was also concerned about the caps resulting in throttling of payments, although she favored a simpler fixed cap approach.
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