Although payment system innovation has historically been driven by the private sector, the Federal Reserve System is exploring whether it should operate more of the system and/or more forcefully direct the industry going forward. It would do so on grounds that central direction is essential to ensure prudent product innovation and to protect a vital underpinning of the U.S. economy. Were it to proceed, the system could be both safer and more ubiquitous, but new initiatives could also force reduced use of paper checks instead of awaiting gradual market transition, mandate cross-border payment standards dictated by the Federal Reserve, and perhaps give the central bank a new, over-arching role offering services and governing practice in both retail and wholesale payments.

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