Fed Functions: Fostering Payment and Settlement System Safety and Efficiency

August 14, 2019 posted by


Federal Functions:
Promoting Safe and Efficient Payment
Systems Video RYAN. Hi, I’m Ryan. SUSAN. And I’m Susan. We work for the Federal Reserve, the central bank of
the United States. One of the five key functions of the Federal Reserve
is fostering the safety and efficiency of our nation’s
payment and settlement systems. Whether you’re paying
your babysitter in cash, writing a check to the
plumber, swiping your debit card at the grocery store, or getting
your paycheck by direct deposit, you’re participating
in a payment system. RYAN. Payment systems facilitate
financial transactions and purchases of goods and
services by individuals and institutions, consumers
and businesses, and investors and securities issuers. The Fed plays an important role
in maintaining the integrity of U.S. payment systems
and keeping cash, check, and electronic transactions
moving reliably and securely throughout
our economy. For example, the Federal
Reserve Board in Washington, D.C. issues paper currency,
which is put into circulation by Federal Reserve Banks
around the country. SUSAN. The Reserve Banks
also distribute coins and act as a “bank for banks.” In that role, they collect
checks deposited by banks, and return unpaid
checks to banks on which the funds are drawn. In addition, the Fed offers
financial services to banks that help process your everyday
credit and debit transactions– like grocery store purchases
or recurring bill payments and other more sizable
transactions– like real estate purchases
or securities transfers– between and among businesses,
banks, and individuals. RYAN. The Fed also acts as
the “government’s bank,” providing services such as
maintaining the Treasury Department’s transaction
account and issuing and redeeming U.S.
government securities. And the Fed is also responsible for developing certain
regulations and supervisory policies for
elements of the payment systems. For example, over the years,
the Fed has adopted rules that facilitate electronic
collection and return of checks and that limit debit
interchange fees. SUSAN. The Fed also
conducts research on payment systems
design, risks, and technological innovation
and looks at usage trends to ensure these systems are
evolving and keeping pace with the needs of the people
and businesses who rely on them. Collectively, these
efforts support the smooth and efficient operation of
the nation’s payment systems and promote the stability of our
financial system and economy. RYAN. For more information
on this and other functions of the Federal Reserve,
visit www.federalreserve.gov and click on About the Fed. October 23, 2018
Federal Reserve Board

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