The Federal Reserve last week announced a $5.8 million contract to buy communications switching equipment from Data Switch Corp., Shelton, Conn.

The vendor's Data Switch Universe and Monolith Plus communications switches will be used in a new FedNet computer network to be installed by the first quarter of 1994.

FedNet is intended to provide an improved electronic link between the Fed's computers and those of banks. It will handle Fed Wire funds transfers, orders to buy and sell Treasury securities, and the transfer of other information between commercial banks and regional Fed banks.

FedNet is intended to be more reliable and handle more types of information than the current Federal Reserve network. It is also being engineered to support emerging technologies such as image processing.

Network equipment vendor Ascom Timeplex, Woodcliff Lake, N.J., was hired earlier this month to oversee the design and installation of FedNet, and to maintain and support the network through 2002.

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