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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Benefits of Real-Time Payments
- Real-time payments could reduce overdraft fees and benefit businesses.
- FedNow offers potential upsides for households and businesses by providing faster access to funds.
Public Discourse on Bank Regulation
- Bank regulation discussions, including Basel Endgame, have become unusually public.
- Ads about Basel during NFL games exemplify this shift.
Basel Endgame Impact on Lending
- Increased capital requirements enhance banking system resilience but increase bank costs.
- The proposed changes would minimally impact average loan costs, estimated at a 0.03% increase.