Fed System Would Ensure Broad Access and Stop Megabank Monopoly
Washington, D.C. (July 24, 2019)—The Independent Community Bankers of America® (ICBA) today reiterated its call for the Federal Reserve to develop its own real-time payments settlement system to ensure universal access and avoid a megabank monopoly. In a letter to Fed Chairman Jerome Powell that also went to other members of the Fed board as well as members of Congress, ICBA President and CEO Rebeca Romero Rainey said the Fed is uniquely positioned to provide equitable access to real-time payments, which will encourage innovation that will benefit consumers nationwide.
“Industry-wide ubiquity may never be achieved without the Federal Reserve developing and operating a real-time gross settlement system and interoperating with the private sector,” Romero Rainey wrote. “The Federal Reserve’s development and operation of a real-time gross settlement system would also insert needed competition into real-time payments.”
Romero Rainey said extending the Fed’s long-standing roles in the payments system to real-time payments would avoid the risk of having only one, for-profit settlement service run by the nation’s largest and riskiest financial institutions. Preventing a private-sector monopoly would give community banks a choice of settlement providers and extend access to cutting-edge payments technology to local communities—encouraging further innovation and avoiding a fragmented marketplace.
As the Fed considers whether to develop and operate a real-time gross settlement system, a consortium of the nation’s largest banks has developed its own payments platform and is strongly opposing Fed involvement to prevent competition and preserve its monopoly. The nation’s community banks have long pushed for a Fed alternative—including in hundreds of comment letters to the agency—and have been joined by consumer groups, technology leaders, and retailers.
ICBA will continue working with policymakers to support a real-time payments settlement system at the Fed and looks forward to the Fed’s decision.