Fed commits to speeding up payments following task force report

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The Federal Reserve says it is committed to modernizing the U.S. payments system and plans to offer specific steps for doing so some time in the early fall.

In a statement Monday, Fed Gov. Jerome Powell applauded the work of a faster-payments task force and said that the central bank intends to build on its recommendations.

“We are committed to advancing payment system improvements and look forward to communicating our next steps in the coming weeks,” Powell said.

The 300-plus-member task force, drawn mostly from the private sector, issued its final report on Friday. It establishes a goal that by 2020, anyone with a U.S. bank account should be able to receive payments in something close to real time.

The report recommends the development of a framework for governance of a faster payments system that would feature multiple competing products. This framework might be run by a new private-sector entity that resembles Nacha, the banking industry group that sets the rules for the automated clearing house network.

The Federal Reserve convened the task force in 2015 after determining that the nation’s payments system needed substantial upgrades.

Last week’s report asks the Fed to design and implement a service that would enable banks and credit unions to settle up with each other around the clock.

On other issues, the 63-page report is less clear about what the Fed’s job should be. It recommends, for example, that the Federal Reserve assess whether it should take a larger operational role.

A Fed official said last week that the central bank will publish its latest thinking about faster payments in early fall.

“The task force has accomplished groundbreaking work to define what stakeholders expect from a future payment system and how industry collaboration can help to deliver it,” Esther George, president of the Federal Reserve Bank of Kansas City, said in Monday’s statement. “The level of collaboration within this large and diverse group of stakeholders was encouraging and productive.”

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