Fed finalizes updates to policy on payment system risk

Bank Regulatory Federal Issues Agency Rule-Making & Guidance Federal Reserve Federal Reserve Banks Payments FedNow Risk Management

On December 2, the Federal Reserve Board finalized clarifying and technical updates to its Policy on Payment System Risk (PSR). The changes, which are adopted largely as proposed in May 2021 (covered by InfoBytes here), expand depository institutions’ eligibility to request collateralized intraday credit from the Federal Reserve Banks (FRBs), and ease the process for submitting such requests. The final updates also clarify eligibility standards for accessing uncollateralized intraday credit; modify the PSR policy to support the launch of the FedNow instant-payments platform, which is scheduled for mid-year 2023 (covered by InfoBytes here); and simplify and incorporate the related Overnight Overdrafts policy into the PSR policy. Updates related to FedNow and the Overnight Overdrafts policy will take effect once the FRBs start processing live transactions for FedNow. The remaining updates are effective 60 days following publication in the Federal Register.