Regulation D: Reserve Requirements of Depository Institutions
Key claim: The Federal Reserve proposes to amend Regulation D to create a new ‘Payment Account’ category that would be excluded from interest payments on balances held at Reserve Banks, while leaving reserve requirement ratios unchanged at zero.
Abstract
(Proposed Rule · Federal Reserve System) The Board of Governors of the Federal Reserve System (Board) proposes to amend its Regulation D (Reserve Requirements of Depository Institutions) to differentiate between master accounts and a proposed new category of special-purpose payment accounts (Payment Accounts). The proposed amendments would exclude Payment Accounts from Regulation D’s provisions directing Federal Reserve Banks (Reserve Banks) to pay interest on balances maintained at a Reserve Bank. As a result, the Reserve Banks would not pay interest on balances maintained in Payment Accounts. The proposal would not affect reserve requirement ratios, which would remain zero.
Why this matters
Interest on reserve balances is the Fed’s primary monetary-policy transmission tool, so carving out a ‘Payment Account’ category that receives no IORB is a structural move to prevent narrow-purpose or payment-focused entities (potentially including stablecoin issuers) from arbitraging Fed master-account access as a risk-free yield vehicle. For banks and prospective payment-institution entrants, the proposal signals that Fed master-account access will not automatically confer the same balance-sheet economics available to traditional depository institutions. It also connects reserve-balance policy to the emerging GENIUS Act stablecoin framework.