Federal Reserve press conference, 2019-01-30 — Chair Jerome Powell

Question (Victoria Guida, Politico): Victoria Guida with Politico. I just wanted to ask, first of all, about whether the Fed is gathering information about some of the new money laundering information that’s come out about Deutsche Bank and Danske Bank and whether you have any concerns there? And then, also, I was just wondering if you could say whether there’s any kind of timeline on when the Fed might make a decision on real-time payments and whether you’re going to build a real-time payment system?
Answer: Right. So, on the first question, I can—we don’t comment on individual investigations or whether they’re happening. I will say that we take our enforcement powers very seriously, and we put them to work when we feel it’s justified. In terms of real-time payments, it’s something we’re very actively working on. As you obviously know, we have some proposals out, and we’re considering them. You know, the thing is, it’s very important in that space to consult with the full range of market participants and interest groups, consumer groups, and we’ve done that, as I’m sure you know, over a period of years. We don’t have plenary authority to just do things, for the most part, in the payment space. We’ve been more of a convener, bringing industry and the public—public interest groups—and all those groups around the table. And we’ve—I think we’ve played a constructive role in that respect, and I believe that will continue.

Question (John Heltman, American Banker): Chairman Powell, the Office of the Comptroller of the Currency last year completed its fintech charter. And one of the questions around that charter has been whether the Federal Reserve will allow such a chartered bank to access the payment system. I’m curious if you think a fintech charter is a good idea in general, and what conditions you think might be necessary to allow the Fed to allow such a chartered institution access to the payment system.
Answer: I’m not going to be able to help you much on that. Those are great questions, and those are questions that are, you know, that our great supervisory people are looking at. I think we’re open to these ideas, but I don’t have any news for you on that today.

Question (Jean Yung, MNI): But do you take the survey results as given, or do you try to encourage banks from holding a [inaudible]?
Answer: We don’t take—you know, we don’t think we have a precise understanding of this at all. I want to be clear about that. These estimates are fairly uncertain. So if you think that the level of demand for reserves is here [gesturing with hands together, in the middle], all you can say is, it’s probably somewhere in this range [gesturing with hands apart, equidistant from the middle]. If banks want to use reserves for a good and sufficient reason—which is to say, to hold liquidity as we require them to do to meet the liquidity coverage ratio, to meet their resolution requirements and resolution planning—we’re not going to discourage them from holding them. They are, in fact, a very safe asset—in a way, the safest asset. And we want the banks to be safe and sound. We didn’t create the reserves, you know, with that in mind, but, you know, since—in the post-crisis, you know, regulatory regime, we have brand-new and quite substantial liquidity requirements, which are very good and which have great public benefit. So it’s not a bad thing that banks hold onto these reserves or another safe asset. We don’t—we’re not encouraging them to hold reserves instead of Treasuries. Treasuries or reserves are roughly equivalent for this purpose.