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Federal Reserve Payment System Disrupted

The Fed says an 'operational error resulted in disruption of service in several business lines.'
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The Federal Reserve’s system for interbank payments went down Wednesday morning.

The central bank said in a statement that it became aware of the situation at around 11:15 a.m. U.S. Eastern. There were no initial indications that foul play was suspected, according to CNBC. 

“A Federal Reserve operational error resulted in disruption of service in several business lines," a Fed spokesperson said in an email. "We are restoring services and are communicating with all Federal Reserve Financial Services customers about the status of operations.”

The problem affected payment deadlines and the spokesman said the Fed “will communicate remediation efforts to our customers when available."

The list of services that were affected by the disruption include 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.

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The interruption affected several Fed services including the automated clearinghouse system, a nationwide network where depository institutions send each other batches of electronic credit and debit transfers. This includes direct deposit of payroll, Social Security benefits, and tax refunds.

On the ACH Network during the fourth quarter, 7 billion payments were made, an 8.9% increase over the year-earlier period.

Direct debiting of mortgages and utility bills is a typical example of ACH debit transfer. 

Payments to individuals by direct deposit in Q4 increased by 11.1% to more than 2 billion.

While the ACH network was originally used to process mostly recurring payments, the Fed said on its website, "the network is today being used extensively to process one-time debit transfers, such as converted check payments and payments made over the telephone and Internet."