Fed proposes expansion of large-value payments

The Federal Reserve Board has asked for comments on a proposal to extend the business days of the Federal Reserve Bank’s two large-value payment services to include weekends and holidays, so that they would be open every day of the year.

Currently, both the Fedwire^® The Fedwire Funds Service and the National Settlement Service (NSS) are open Monday through Friday, excluding holidays. Under the proposal, both services would be open daily, year-round. Hours would remain the same each day, with the Fedwire Funds Service open 22 hours a day and the NSS open 21.5 hours a day. Use of the extended hours by service participants such as banks and credit unions would be voluntary.

The Fedwire Funds Service is a wholesale payment service that allows service participants to send and receive individual electronic funds transfers of up to $10 billion. The NSS is a settlement service for participants in private sector clearing arrangements, such as check clearing houses, an automated private sector clearing house network, and securities settlement systems. The proposal does not include changes to the Fedwire Securities Service or the Federal Reserve’s new retail instant payments service, the FedNow^® Service.

The proposal follows feedback from a number of stakeholders on the benefits of extending the days of operation for each service. Providing large-value payment services every day would support the security and efficiency of the U.S. payment system and help position the country’s payment and settlement infrastructure for the future. For example, the potential benefits of extending days of operation include improving the credit risk and operational efficiency of systemically important financial market service providers and private retail payment arrangements, encouraging innovation in new or improved private payment solutions, and supporting more efficient cross-border payment flows. On the other hand, operational and technical changes would also be required, which would incur costs. The proposal seeks feedback on all aspects of the proposal, including the benefits and the potential costs and risks.

Comments on the proposal will be accepted for up to 60 days after publication in the Federal Register.

Source: Federal Reserve

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