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For about four hours Wednesday, Federal Reserve systems that execute millions of financial transactions a day -- everything from payroll to tax refunds to interbank transfers -- were disrupted by what appeared to be some sort of internal glitch.
Systems were mostly restored by the end of the day, but the outages once again raise questions about the resilience of critical infrastructure that Americans rely on to process payments. The episode follows two significant disruptions to the Fed’s payment services that occurred in 2019.
“A Federal Reserve operational error resulted in disruption of service in several business lines,” Jim Strader, a spokesman for the Richmond Fed, said in an e-mailed statement. “We are restoring services and are communicating with all Federal Reserve Financial Services customers about the status of operations.”
The Fed restored the automated clearinghouse system known as FedACH as well as its Fedwire Funds, Fedwire Securities, Central Bank, National Settlement, FedCash, Check 21 and Check Adjustments services, according to a website operated by the central bank. Account Services was still suffering outages as of 4:25 p.m. New York time.
Down for Hours
The Fed website noted the disruptions were discovered around 11:15 a.m. and Strader declined to comment on whether they were a result of system updates or human error.
Inside financial firms, traders were generally calm, still handling transactions. A mood of initial confusion subsided as many realized they weren’t affected, one said.
ACH is a national system that processes batches of electronic funds transfers such as payroll, social security benefits, tax refunds, corporate payments to vendors and utility payments, according to the Fed’s website. The commercial service handled 62.1 million transactions a day on average in 2019 with an average value of US$1,802, the latest year for which data are available.
In a posting on its website at 2:46 p.m. the Fed said it was taking steps to ensure the resilience of its services but urged customers to double check that any messages they had sent or received had been reconciled.
The disruptions come as the central bank is preparing to take on even more responsibility. It’s separately developing its own same-day settlement payment system called FedNow. It is expected to operate in direct competition with an industry-run payments system started in 2017 by an organization of Wall Street banks, including JPMorgan Chase & Co. and Citigroup Inc.
The Fed’s system has suffered problems before. In 2019, the FedWire interbank funds transfer service went down for about three hours. The Fed blamed the outage on “an internal technical issue,” but declined to provide more details.
Bloomberg News sought additional information about that incident under the Freedom of Information Act, but the request and a subsequent appeal were denied by the Board of Governors.
--With assistance from Jesse Hamilton, Lananh Nguyen, Michelle F. Davis and Christopher Condon.