ICBA strongly urges the CFPB to concentrate its efforts and resources on greater supervision of irresponsible actors that are not regularly examined.
Development of a Real Time Gross Settlement System. The addition of a Real Time Gross Settlement (RTGS) system by the Federal Reserve for the settlement of faster payments complements present-day clearing and settlement systems by providing immediate funds settlement transaction-by-transaction on a 24x7x365 basis. Such a platform serves as a foundation for innovation, not just for payments today but as payments evolve in the future.
By developing and operating a RTGS service, the Federal Reserve: 1) provides financial institutions an infrastructure option for clearing and settling faster payments; 2) ensures access for all financial institutions; 3) provides a settlement option that is not affiliated with or owned by the nation’s largest banks; 4) serves as a backbone to ensure settlement continuity in the event of disruption in the private-sector; 5) provides a settlement option with transparent rules; and 6) encourages competition and innovation.
Ubiquitous Adoption. Ubiquitous adoption among financial institutions should be the primary measure of success for achieving payments modernization in the U.S. The establishment of FedNow provides choice for every community bank desiring to implement a real time settlement solution. Achieving industry-wide ubiquity will require all community banks to evaluate and implement a real-time settlement solution.
Interoperability. Both the public and private sector providers should aim for interoperability at the earliest possible date, but the Federal Reserve should not delay developing and launching FedNow as the path to interoperability is discussed and charted.
Impact of Existing Legal Framework. Many faster payments networks operate with credit push payments flows that result in the payment being irrevocable. Many of the protections included in the existing legal and regulatory framework need to be revisited to accommodate new payments settlement networks such as FedNow and RTP.
Liquidity Management Tools. The Federal Reserve should provide tools which assist community banks in managing liquidity on a 24x7x365 basis to support services for real-time interbank settlement of faster payments. These tools could include extension of National Settlement Service (NSS) cutoff times to include holidays and weekends, transfers between financial institutions and Federal Reserve accounts, and access to the Federal Reserve discount window.
These tools should be available for the FedNow service and also for any bank-centric private sector payments settlement service. Correspondent banks and bankers’ banks play a valuable role in liquidity management by serving as funding agents.
U.S. Faster Payments Council. ICBA, its staff and its members actively support the U.S. Faster Payments Council (FPC). As a founding member of the FPC, ICBA actively contributes by holding a leadership role on the board of directors and through robust participation in all workgroups.
The FPC was established by the Faster Payments Task Force, which believed that an industry-led framework for cross-solution collaboration and decision making was needed to support achievement of a faster, ubiquitous, broadly inclusive, safe, highly secure, and efficient payments system. Community bank participation in the FPC provides a voice in industry collaboration, a voting responsibility for FPC initiatives and leadership, and an opportunity to influence the development of faster payments.