(June 4, 2021) A “new and comprehensive” set of rules – but with concepts that are like existing regulations – to govern the Federal Reserve’s new round-the-clock instant payments service was proposed this week by the agency.
The new rules apply to the Fed’s upcoming “FedNow” service, expected to be available in 2023. The service, the Fed has said, will support instant payments in the U.S. (using concepts similar to existing provisions) 24 hours a day, seven days a week, 365 days a year.
In a release, the Fed said the rules it is proposing detail legal rights and obligations of Federal Reserve Banks and FedNow participants. Under the proposal, the Fed would amend its Regulation J (which governs funds transfers, particularly by check processing and Fedwire funds, among other things), establishing a new subpart C. That subpart would set up the new rules governing funds transfer using FedNow; the current subpart B (applying to Fedwire Funds Service) of the rule would no longer apply to transfers over FedNow.
Subpart B would be altered to reflect the fact that the reserve banks will be operating a second funds transfer service in addition to the Fedwire Funds Service, the Fed said. Some technical changes to subpart A, governing the check processing service, are also proposed.
The proposal was issued with a 60-day comment period.