January 26, 2015- The Federal reserve issued a report titled “Strategies for Improving the U.S. Payment System” offering solutions to enhance the speed, safety and efficiency of the U.S. payment system. Falling behind various other countries in optimization of payment systems, the Fed is finally is adopting these measures.
“A safer, more efficient and faster payment system contributes to public confidence and economic growth,” said Federal Reserve Board Governor Jerome H. Powell, who will co-chair the initiative’s oversight committee. “We look forward to working with payment stakeholders to realize this vision.”
The paper outlines the strategies and tactics the Federal Reserve will pursue in collaboration with stakeholders, as well as detailed outcomes for the payment system. They intend to establish a task force to advise the Federal Reserve on reducing payment fraud and advancing the safety, security and resiliency of the payment system. Additionally, the Federal Reserve will pursue efforts to enhance payment system efficiency through work on standards, directories and business-to-business payment improvements, alongside efforts to enhance Fed-provided services for same-day automated clearing house (ACH), risk management and settlement.
Esther George, president of the Federal Reserve Bank of Kansas City and a member of the Federal Reserve’s Financial Services Policy Committee said “This plan reflects the contributions and commitment of thousands of payment system participants who shared their expertise and perspectives during the past 18 months, Consequently, we believe the strategies and tactics in the plan have broad support and strong prospects for success.” George will serve as executive sponsor for the payment system improvement initiative, a joint effort of the Federal Reserve Banks and Board of Governors.
In a con call with reporters, Fed staff said that they see the new report as representing an increase in the Fed’s role as a leader or catalyst for change. On the other hand, they said that the Fed will not step in and build its own new payment service unless the private sector cannot meet the need, and certain other criteria are met, as reported by American Banker. Amidst scepticism the Fed staff claim that there is a strong sense of urgency on the issue of payment speed.
The Financial Services Policy Committee (FSPC) is responsible for the overall direction of financial services and related support functions for the Federal Reserve Banks, as well as for providing Federal Reserve Bank leadership to foster the integrity, efficiency and accessibility of the evolving U.S. payment system.
(image credit: Donkey Hotey)