FRB Will Upgrade U.S. Payment System to Provide Interbank Settlements in Real Time

The Federal Reserve Board ("FRB") will upgrade the U.S. payment system to provide payment-by-payment interbank settlements in real time (i.e., real-time gross settlements or "RTGS").

As previously covered, FRB Governor Lael Brainard stated that although it may be operationally demanding, RTGS would reduce risk by eliminating the need for deferred interbank settlements, which are effectively "IOUs" between banks. She also stated that RTGS would increase the overall efficiency of the U.S. payment system.

The FRB estimates the arrival of the new real-time payment and settlement service, FedNow Service, to be in 2023 or 2024. In anticipation of the service's availability, the FRB is requesting comments on how payment system stakeholders and the operations of the U.S. payment system may be best supported with regard to the design of FedNow Service.

Comments must be submitted within 90 days of publication of the notice in the Federal Register.