The Federal Reserve released a new paper yesterday that gives greater granularity around next steps to shepherd the development of a new solution for real time payments (RTP). This document, called “Strategies for Improving the U.S. Payment System: Federal Reserve Next Steps in the Payments Improvement Journey” that you can find here, is a follow up to the document published in July that outlines the final results of the Fed’s Faster Payments Task Force. This latest document is gives a glimpse into the role or roles that the Fed may continue to play in the evolution of RTP. For example, the Fed envisions itself managing settlement:
Pursue Federal Reserve settlement services that address the future needs of a ubiquitous real-time retail payments environment. The Federal Reserve will actively engage with the industry to thoroughly understand gaps and requirements for real-time retail payments settlement, as well as to assess alternative models for enhancing Federal Reserve settlement to support real-time retail payments over the long term. As the nation’s central bank, the Federal Reserve plays a unique role in providing credit risk-free settlement, which helps reduce risk and promotes financial stability. In addition, the Federal Reserve has solicited input from stakeholders to identify possible enhancements to its multilateral settlement system, the National Settlement Service.
Beyond a role in settlement, the Fed is also keeping the door open to play a much larger role and provide other services, if the private industry doesn’t step up to the plate by 2020 and deliver solutions that meet the requirements outlined by the task force:
Explore and assess the need, if any, for Federal Reserve engagement as a service provider, beyond providing settlement services, in the faster payments ecosystem to support industry achievement of the desired outcome. The Federal Reserve will assess whether it is appropriate to provide services to support the industry in addressing gaps in capabilities or barriers to achieving the desired outcome, considering requests from stakeholders and the Faster Payments Task Force’s goal of ubiquitous receipt of faster payments by 2020.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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