Odd Lots The Fed's Michael Barr on Real-Time Payments and the Basel Endgame
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Nov 17, 2023 Michael Barr, Vice Chair for Supervision at the Federal Reserve, is at the forefront of banking regulation and the rollout of FedNow, a new real-time payment system. He discusses the evolution of payment systems and how FedNow aims to reduce transaction fees while addressing recent bank collapses. Barr emphasizes the need for proactive risk management and regulatory adaptation to support sectors like clean energy. The conversation also touches on the balance between financial innovation and regulation, highlighting challenges posed by cryptocurrencies.
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FedNow Adoption
- FedNow's adoption will take time, similar to other payment innovations.
- Banks must recognize customer demand before innovating on the platform.
Payment Rails
- The US has a history of both public and private payment rails.
- FedNow and the Clearing House's system are complementary, not competing.
SVB and FedNow
- Silicon Valley Bank's failure stemmed from mismanagement, not technology.
- Banks can control risks by setting limits on FedNow transactions.