Federal Reserve Financial-Services Systems Disrupted for Hours -- 4th Update
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
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
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
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
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 firstname.lastname@example.org
(END) Dow Jones Newswires
February 24, 2021 17:25 ET (22:25 GMT)
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