Federal Reserve Proposes US Central Bank Payment System Changes

The Federal Reserve Board has been looking closer at how financial firms get access to the U.S. Central Bank’s payment system, Bloomberg reported Tuesday (March 1).

This has been a big question for Sarah Bloom Raskin, President Biden’s pick to be the top bank regulator. On Tuesday, the Fed unveiled its proposed plan, adding that it wants to make sure the process that evaluates new requests is fair.

The plan is built off a framework from May 2021, which would create a tiered system and make the process easier for federally-insured lenders. However, entities not supervised by Washington regulators would have to face more questions.

The question of access to the Fed payment system has been elevated during Raskin’s testimony to potentially become the banking head. She’s faced opposition from Republicans, including controversy over her previous job at Reserve Trust, which is a FinTech that was granted access to the payment system.

“With technology driving rapid change in the payments landscape, the proposed guidelines would ensure novel requests for access to Federal Reserve accounts and payment services are evaluated consistently and transparently to ensure a safe and innovative payment system,” Fed Governor Lael Brainard said in the Tuesday announcement.

Earlier in February, Republicans blocked a vote on whether to appoint Raskin by refusing to attend the vote.

Read more: GOP Senators Oppose Raskin for Fed Job, Block Vote

The vote was for all five picks or the Fed, but the disagreement, as it had been for the last several weeks, was over Raskin. Sen. Sherrod Brown (D-Ohio) said Republicans had been purposefully trying to make it so the Fed can’t combat challenges like inflation.

The concerns about Raskin included the aforementioned Reserve Trust, in which there were allegations that she’d used her position from a previous government job, under former President Barack Obama, to get benefits for the company.

“Until basic questions have been adequately addressed, I do not think the committee should proceed with a vote on Ms. Raskin,” the committee’s top Republican, Sen. Pat Toomey (R-Pa.), said ahead of the scheduled vote.