It would allow them to conduct financial transactions through the Fed's payment infrastructure, albeit with a lower level of protection compared to traditional bank accounts.

As the regulator stated in its announcement, the proposed accounts would not provide access to intraday credit or the Fed's discount window, nor would they earn interest on reserves held at the central bank.

This proposal builds upon the Fed's previous work exploring simplified accounts as part of an effort to broaden access to payment infrastructure while simultaneously mitigating potential risks to the financial system.

According to the central bank, this proposal does not expand or alter existing legal eligibility requirements for opening accounts at the Fed.

Furthermore, the Fed has directed the Federal Reserve Banks to pause decision-making regarding the provision of non-traditional accounts until work on the new policy is complete.