Federal Reserve Board Issues Guidelines for Evaluating Joint Account Requests

The Board of Governors of the Federal Reserve System ("FRB") published guidelines for evaluating joint account requests. Joint accounts are Federal Reserve accounts opened by Federal Reserve Banks in which multiple depository institutions share account rights and liabilities.

In the announcement, the FRB stated that the new guidelines are being adopted because of "continued innovation in the U.S. payment system and the likelihood that there may be broader interest in such joint account arrangements going forward." Historically, joint accounts have not been available as a standard option, and Federal Reserve Banks have opened joint accounts only in "limited cases" and for "specific purposes."

The new guidelines provide criteria for evaluating requests to establish joint accounts for the purpose of facilitating settlement among depository institutions participating in private-sector payment systems. The criteria include the following:

• each account holder must meet legal requirements for holding a Federal Reserve Account;

• a private-sector arrangement must have a "sound legal and operational basis" and be consistent with FRB requirements for safety, efficiency and accessibility;

• the creation of a joint account must not result in undue risk to a Federal Reserve Bank or the overall payment system; and

• the provision of a joint account must not impact the monetary policy framework negatively.

According to the FRB, the guidelines only provide an outline of the components that will be considered as part of an evaluation. Each application will be assessed based on its specific features. The final guidelines will become effective on the date of their publication in the Federal Register.