Jeffrey Schmid

Faster Payments Could Erode Banks’ Core Deposit Franchise

Kansas City Fed President Jeffrey Schmid argues that the important payments shift is not digitization but the growing speed and range of ways money can move, which could make banks’ deposit funding less predictable. Instant-payment rails, stablecoins and other emerging models may erode the float and stability that once defined the core deposit franchise, he says, while raising the stakes for resilient payment infrastructure. Schmid places that work within a Fed mandate he says is owed to the public—not financial markets—and requires both inflation control and dependable financial plumbing.