With decision from Fed pending on ‘faster payments,’ key governor plans speech on ‘payments systems’

“Payment systems” is the topic a speech scheduled for Monday by Federal Reserve Board Gov. Lael Brainard in Kansas City, following closely on the heels of comments by the Fed’s board chairman this week that a decision on Fed involvement in a “real-time payments” system was coming soon.

Brainard will be delivering the remarks at the Federal Reserve Bank of Kansas City’s town hall meeting in Kansas City. Her web-streamed remarks are scheduled to begin at 1:30 p.m. ET.

Brainard is the chair of the Fed’s committee on payments, clearing, and settlement (as well as chair of the Fed’s Payments System Policy Advisory Committee) and has been leading the central bank’s efforts in its “faster payments” initiative, aimed at studying a real-time payments system in the U.S. In October, the Fed issued a call for comments from the public seeking input about potential steps the Fed could take to support the vision of a real-time gross settlement (RTGS) system of faster payments.

In a speech shortly after release of that comment call, Brainard said the Federal Reserve Banks around the country could develop a service for RTGS that is available on a 24/7 basis to provide payment-by-payment interbank settlement in real time and at any time, on any day, including weekends and holidays. She noted that the Fed banks already provide payment services to more than 11,000 banks, credit unions, and other financial institutions across the country. “A 24/7 RTGS service provided by the Reserve Banks could significantly improve the prospect that banks of all sizes will have equitable access to a real-time interbank settlement infrastructure for faster payments in the long term,” she said.

Last week, during a press conference, Federal Reserve Board Chair Jerome H. (“Jay”) Powell said the comments received from the comment call were “overwhelmingly favorable” for the Fed’s involvement. He said at that press conference that he expected a decision by the Federal Reserve about its involvement with a “real-time payment system” proposal will be made soon. He also noted, pointedly, that the U.S. is “far behind other countries in terms of having real-time payments available to the general public.”

In a letter to senators earlier this week, Powell was more forceful about a Fed role in the payments system. He said the central bank was “uniquely placed” to overcome the difficulty of establishing nationwide access because of its existing payment infrastructure and relationships with thousands of depository institutions across the country.

Calendar, Federal Reserve Board of Governors

Be the first to comment

Leave a Reply

Your email address will not be published.