FED is inviting public comment on the actions it could take to support faster payments in the United States. Comments are due by December 14, 2018. The potential actions, which would facilitate real-time interbank settlement of faster payments, build on collaborative work with the payment industry through the Federal Reserve System's Strategies for Improving the U.S. Payment System (SIPS) initiative. FED had established the SIPS initiative in 2013 with the objective of engaging with the payment industry and other stakeholders to upgrade and enhance the payment system in the nation.
While FED is not committing to specific actions, it is seeking input on whether the following the potential actions, separately or in combination—or any alternative approaches—would help achieve ubiquitous, nationwide access to safe and efficient faster payments:
- Development of a service for real-time gross settlement (RTGS) of faster payments that would be available 24 hours a day, seven days a week, and 365 days a year (24x7x365)
- Creation of a liquidity management tool that would enable transfers between Federal Reserve accounts on a 24x7x365 basis to support services for real-time interbank settlement of faster payments, whether those services are provided by the private sector or the Federal Reserve Banks
Real-time settlement avoids interbank credit risk by aligning the speed of interbank settlement with the speed of underlying payments. Thus, broad use of real-time settlement for faster payments could enhance the overall safety of the faster payments market in the United States. Development of a nationwide real-time interbank settlement infrastructure by FED could encourage more banks to develop faster payment services, thus creating more choice for consumers, households, and businesses. Additionally, a liquidity management tool could improve the level of participation by banks in a real-time settlement infrastructure for faster payments and thus lead to public access to faster payment services, by mitigating risk that can arise for banks, outside of the standard business hours.
Comment Due Date: December 14, 2018
Keywords: Americas, US, Banking, PMI, RTGS, Interbank Settlement, SIPS Initiative
Previous ArticleEC Amends Regulation on Prudent Valuation for Supervisory Reporting
FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).
ISDA launched the IBOR Fallbacks Supplement and the IBOR Fallbacks Protocol, with both becoming effective on January 25, 2021.
BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.
FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.
EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.
ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).
HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.
APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.
PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).
US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).