OCC's Brooks questions need for government-owned payment systems

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WASHINGTON — Acting Comptroller of the Currency Brian Brooks questioned the idea of government-owned payment rails as the future of money transmission on Thursday, arguing instead for a decentralized system led by private companies.

Speaking with Circle Financial Services CEO Jeremy Allaire on the “Money Movement” podcast, Brooks pointed to the history of innovation in the U.S. payments system, which he claimed was largely driven by the private sector. He used the Visa network as an example of a now-ubiquitous payments system that started out simply as a credit card offered by Bank of America.

“What I always find puzzling when we talk about this is, why, given that history, people now believe that the payments system is a government service,” Brooks said.

“It's definitely a public good in the economic sense of, there are benefits created that cannot be fully captured by the owner so, in that sense, it is a public good," he continued. "But why do we think it has to be owned by the government when none of the things we've just described were ever owned by the government?”

Brooks, a longtime fintech enthusiast and a former chief legal officer at Coinbase, appeared to favor decentralization over centralized payments systems like the one overseen in the U.S. by the Federal Reserve. The Fed is currently focused on expanding its reach into the payments realm by developing FedNow, a real-time payments service.

“My personal view is, the ultimate public ownership of the payment rails is when you have a network, like the internet, of interconnected institutions and computers that are maintaining ledgers and allowing direct person-to-person transactions,” Brooks said.

He added later, "We're way down the path of decentralization."

"I think we're now maybe close to the point where we will achieve ultimate decentralization," he said. "And we've been on this journey for 200 years."

Brooks's remarks Thursday echoed a 2019 essay he published in Fortune magazine in which he argued the private sector was better positioned than the U.S. government to develop a so-called digital dollar.

Brooks said in the essay that there was “no more need for the government to control the blockchain policy of stablecoin issuers than there is for the government to dictate the technology used by privately owned commercial and investment banks.”

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OCC Brian Brooks Cryptocurrencies Digital payments Federal Reserve Faster payments