The Fed’s systems that execute millions of trades a day failed on Wednesday due to what appeared to be an internal glitch.
For about four hours on Wednesday, the Federal Reserve’s systems that execute millions of financial transactions a day – from payroll to tax refunds to interbank transfers – were disrupted by what appeared to be some kind of glitch. internal.
Systems were restored at the end of the day, but the outages once again raise questions about the resiliency of critical infrastructure Americans rely on to process payments. The episode follows two major disruptions to the Fed’s payment services in 2019.
“It raises awareness of their business continuity metrics and what’s going on at a single point of failure that doesn’t have a lot of redundancies. It’s quite worrying, ”said David Hart, president of consulting firm NETBankAudit, who was previously a banking examiner and IT auditor at the Richmond Fed.
All services were restored at 7:27 p.m. New York time, according to a website operated by the central bank. The outages affected the automated clearinghouse system known as FedACH and the interbank transfer service of Fedwire Funds as well as several other systems including the US payment infrastructure.
“An operational error by the Federal Reserve resulted in service disruption in several lines of business,” said Jim Strader, a spokesperson for the Richmond Fed, in an emailed statement. “We are restoring services and communicating with all Federal Reserve Financial Services clients regarding the status of operations.”
The national IT operations of the Fed system are managed by the Richmond Reserve Bank. The central bank’s payment services website noted that the disruptions were discovered around 11:15 a.m. and Strader declined to say whether they were the result of system updates or human error, but confirmed that the system continued to operate in other locations.
Within financial firms, traders were generally calm, always handling transactions. An atmosphere of initial confusion subsided as many realized they were unaffected, one said.
ACH is a nationwide system that processes batches of electronic funds transfers such as payroll, social security benefits, tax refunds, business-to-vendor payments, and utility payments, according to the website. Fed. The sales department processed an average of 62.1 million transactions per day in 2019 for an average value of $ 1,802, the latest year for which data is available.
In a post 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 verify that any messages they sent or received had been reconciled.
The disruptions come as the central bank prepares to take on even more responsibility. It is 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 launched in 2017 by an organization of Wall Street banks, including JPMorgan Chase & Co. and Citigroup Inc.
The Fed system has already had problems. In 2019, the FedWire interbank money transfer service was suspended for approximately three hours. The Fed blamed the outage on “an internal technical problem,” but declined to provide further details.
Bloomberg News requested additional information on the incident under the Freedom of Information Act, but the request and a subsequent appeal were denied by the Board of Governors.