The Federal Reserve has opened a public consultation on a proposal that could reshape how certain financial institutions access the U.S. payment system. The plan introduces a new, limited-access “payment account”, often referred to as a “skinny master account,” designed to provide clearing and settlement access without granting the full privileges of a traditional master account.
The proposal reflects the Fed’s attempt to balance payment system innovation with financial stability, particularly as fintech and crypto-related activity continues to evolve.
What a ‘Skinny Master Account’ Would Allow
Under the proposal, eligible institutions would gain direct access to the Fed’s payment systems, enabling them to clear and settle payments more efficiently. However, the account is deliberately constrained to reduce systemic risk.
Balances held in the payment account would not earn interest, distinguishing it from standard reserve accounts. Institutions would also be barred from accessing Federal Reserve credit, including the discount window and daylight overdraft facilities.
In addition, the Fed plans to impose caps on account balances, limiting how much liquidity can be parked within the system.
Together, these restrictions are designed to ensure that the account functions strictly as a payments utility rather than a full banking relationship.
Who the Proposal Is Aimed At
The payment account is intended for institutions that need settlement and clearing services but either do not require or cannot justify a full master account under existing frameworks. This could include certain fintech firms and entities operating at the intersection of payments and digital assets.
Importantly, the proposal does not expand eligibility. Only institutions that are already legally eligible to apply for a master account would be able to request this more limited option.
The idea was first outlined in October 2025 by Christopher Waller, who argued that the Fed must remain responsive to changes in how payments are made. He has framed the proposal as a practical way to accommodate innovation, including developments tied to crypto and digital assets, without exposing the central bank to new forms of credit risk.
Why the Fed Is Taking This Step
The move addresses a long-running tension in U.S. payments policy. Direct access to the Fed’s systems has traditionally been reserved for banks with full regulatory oversight, while newer financial models often rely on intermediaries.
By offering a narrower access path, the Fed is signaling openness to modernization while maintaining firm boundaries around monetary policy tools and lender-of-last-resort functions.
Public Comment and Timeline
The request for information was posted on December 19, 2025, triggering a 45-day public comment period following publication in the Federal Register. Feedback from banks, fintech firms, crypto-related companies, and the broader public will inform whether and how the proposal moves forward.
If adopted, the “skinny master account” could become a key piece of infrastructure for next-generation payment models, providing access where it is needed, while keeping the Fed’s risk exposure tightly controlled.
