February 26, 2021

The Fed’s system that allows banks to send money back and forth went down for several hours

The Federal Reserve’s system that allows financial institutions to send money back and forth electronically…

The Federal Reserve’s system that allows financial institutions to send money back and forth electronically went down for several hours Wednesday, but appeared to be coming back online later in the afternoon.

The “operational error,” as the Fed described it, impacted multiple services, including its pivotal automated clearinghouse system, which connects depository and related institutions sending electronic credit and debt transfers.

There were no initial indications that foul play was suspected.

Along with the Fed ACH service, other systems impacted included Check 21, FedCash, Fedwire and the national settlement service.

A statement from the central bank said it became aware of a problem around 11:15 a.m. ET. A person at one Wall Street bank said the Fedwire and ACH system appeared to be coming back online around 2:45 p.m. ET.

“Fedwire Funds Service, Fedwire Securities Service, and National Settlement Service have resumed processing and are operating normally,” the Fed said around the same time.

The statement further noted that the glitch impacted payment deadlines and said the Fed “will communicate remediation efforts to our customers when available.”

No further information was available.

The list of services impacted: Account Services, Central Bank, Check 21, Check Adjustments, FedACH, FedCash, FedLine Advantage, FedLine Command, FedLine Direct, FedLine Web, Fedwire Funds, Fedwire Securities and National Settlement.

The outage occurred the same week Fed Chairman Jerome Powell spoke to Capitol Hill legislators about the progress the central bank has made on its consumer-focused payments system and efforts to develop a “digital dollar.”

Powell said this will be “an important year” for the program’s development.

“It’s going to be a year in which we engage with the public pretty actively,” the central bank leader said during a House committee hearing.

The Fed has been developing a digital payments system for several years that, among other things, would help unbanked people have greater access to payments systems.

Powell didn’t provide specifics but noted that the Fed could need some official authorization to proceed with its plans.

“We could well need legislative authorization for such a thing,” he said.

Outages, particularly with the ACH system, can have wide-ranging impacts. The system handles direct deposits of payroll, Social Security and income tax refunds as well as auto payments for mortgages and utility bills.

FedCash distributes currency and coins, which have been in tight supply since the Covid-19 pandemic took hold. FedWire is a settlements service, while FedLine provides alternative services to the ACH sytem.