The 2023 policy statement allowed board-supervised state member banks to participate only in activities permissible for banks supervised by other federal bank regulators, according to a Wednesday press release.
The statement also discussed how the policy would apply to certain innovative products and services, per the release.
“Since the policy statement was published, the financial system and the Board’s understanding of innovative products and services has evolved,” the release said. “As a result, the 2023 policy statement is no longer appropriate and has been withdrawn.”
The new policy statement issued Wednesday “creates an avenue for both insured and uninsured Board-supervised state member banks to engage in certain innovative activities,” the release said.
The action was approved Friday (Dec. 12) on a 6 to 1 board vote.
Michelle W. Bowman, vice chair for supervision at the Federal Reserve Board, who voted in favor of the action, said in the release: “New technologies offer efficiencies to banks and improved products and services to bank customers. By creating a pathway for responsible, innovative products and services, the Board is helping ensure that the banking sector remains safe and sound while also modern, efficient and effective.”
Governor Michael S. Barr, who voted against the action, said in a statement issued Wednesday that the principle of equal treatment detailed in the 2023 policy statement helps to level the competitive playing field among banks and mitigates the risks of regulatory arbitrage.
“This principle continues to hold true today,” Barr said. “Therefore, I cannot agree to rescind the current policy statement and adopt a new one that would, in effect, encourage regulatory arbitrage, undermine a level playing field, and promote incentives misaligned with maintaining financial stability.”
Fed Governor Christopher J. Waller said in October that the Federal Reserve wants to further embrace payments innovations and will be more active in studying those advancements.
In a speech for the Fed’s payments innovation conference in Washington, Waller said, “The revolution transforming payments is demanding change everywhere.”