Fed opens a narrow payments door to stablecoin issuers, Arthur Hayes warns of bank fallout

Federal Reserve Governor Christopher Waller proposed a new, limited payment account that would grant stablecoin issuers direct access to Fed payment rails like Fedwire and ACH, bypassing full master account privileges. This 'skinny' account would offer basic connectivity but exclude interest payments, overdrafts, and discount window borrowing, effectively reviving the concept of narrow banking by separating payments from credit creation. This move aims to allow compliant stablecoin issuers to back tokens with central bank money held directly at the Fed, improving settlement efficiency and reducing reliance on commercial bank partners, which could mitigate bank-run risks. However, Arthur Hayes warned that if large issuers gain direct Fed access, it could disintermediate commercial banks by eroding their deposit bases. The Fed's proposed restrictions, such as balance caps, are intended to limit credit exposure and prevent the Fed from becoming the primary deposit taker while still fostering payments innovation.

(Source：CryptoSlate)