The Federal Reserve announced today that it will build its own real-time payments platform. AAF’s Director of Financial Services Policy Thomas Wade has repeatedly detailed the many flaws of this initiative.

“A Federal Reserve real-time payments platform would be costly, time consuming, duplicative, discourage competition, retard progress of existing real-time services, and is likely not consistent with the Fed’s mandate.”

The problems include:

• A real-time payments system already exists and is expected to have complete coverage by 2020;
• To participate in, supervise, and regulate this financial system simultaneously is an overwhelming conflict of interest, as demonstrated by the Fed’s participation in the automated clearing house market; and
• The Fed would need, optimistically, between three and five years to develop, test, and launch this system, at a cost of hundreds of millions of taxpayer dollars.

Wade on this issue:

• Primer: What Is A Real-Time Payments System, And Who Should Operate It?
• How The Federal Reserve’s Automated Clearing House Informs The Fed’s Proposed Real-Time Payments Entry
• Daily Dish: The Fed And Real-Time Payments

To schedule an interview with Thomas Wade on this issue, contact Andrew Evans at [email protected] or at 202.370.3446.