By Paul Kiernan 

The Federal Reserve said Wednesday that an unspecified error disrupted all of its financial-services systems in an extraordinary event that took down key payment systems used by banks, businesses and government agencies for several hours.

Central bank officials couldn't immediately recall a similar episode affecting its systems, which had been seen as extremely reliable. They allow the Fed, which is known primarily for setting interest rates, to perform its less-public role of acting as a bank for the nation's banks and for the U.S. government. It handles tasks including collecting checks, electronically transferring funds, and selling and redeeming Treasury bills -- services that were all offline for more than three hours on Wednesday.

"While root cause is currently being evaluated, there is no indication that the issue is the result of a cyberattack," a Treasury Department official said in a statement sent to banking regulators at 1:47 p.m. ET. A Treasury spokeswoman had no immediate comment.

The Fed sent an alert to users of its financial services at 12:43 p.m. ET of "a possible issue or disruption to multiple services." A subsequent alert said that Fed staff became aware of "a disruption for all services" beginning around 11:15 a.m.

"We acknowledge that payment deadlines are impacted and will communicate remediation efforts to our customers when available," the Fed said.

The full impact of the disruption couldn't immediately be discerned. But the Treasury memo to regulators said it prompted the Payments Risk Committee -- a private-sector group of senior bank managers that is sponsored by the New York Fed -- to initiate "emergency communications protocols." Treasury said it would provide the group with updated information through periodic conference calls.

The disruption caused a payment backlog to build up at banks, which they began working through once the issue resolved. The Fed told clients that "the backlog of files may take time to clear."

One of the services taken offline was the Fedwire Funds Service, which the Fed describes as "the premier electronic funds-transfer service that banks, businesses and government agencies rely on for mission-critical, same-day transactions." Entities use the service to send or receive payments, settle positions with other financial institutions and to submit tax payments, among other activities.

Also impacted were FedACH, an automated clearinghouse network that enables debit and credit transactions, and Fedwire Securities, which provides transfer and settlement services for securities issued by the U.S. Treasury, government agencies and government-sponsored housing enterprises.

The first service to be restored -- at 2:17 p.m. ET -- was the Fed's central bank programs, which include setting interest rates and allowing financial institutions to review and manage the money they hold at the Fed, called reserves. Fedwire and FedACH were back shortly before 3 p.m.

The Treasury Department's memo to regulators said the disruption "required a reboot of servers impacting all payment channels."

--Andrew Ackerman, Michael S. Derby and Orla McCaffrey contributed to this article.

Write to Paul Kiernan at


(END) Dow Jones Newswires

February 24, 2021 17:25 ET (22:25 GMT)

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