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Overview of Payment System Risk Policy Revisions

January 27, 2011

In December, 2008, the Federal Reserve Board adopted significant revisions to part II of the Payment System Risk policy that address the risks that payment and settlement activity present to the financial system and the Federal Reserve Banks.  The revised PSR policy, effective March 24, 2011, reflects a new approach to enhancing intraday liquidity and the flow of payments, while controlling risk to Reserve Banks. This new approach:

  • explicitly recognizes the Federal Reserve’s role in providing intraday credit to foster the smooth operation of the payments system;
  • provides temporary, intraday credit to healthy depository institutions predominantly though collateralized intraday overdrafts; and
  • aims to reduce the reliance of the banking industry on uncollateralized daylight credit if this can be done without significantly disrupting the operation of the payment system or causing other unintended adverse consequences.

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We invite you to join Claire Luceno, Supervisor, and David Xu, Manager, Credit & Risk Management at the Federal Reserve Bank of San Francisco, for a 1-hour call on Thursday, January 27, 2011, to learn more about the scope of these changes and how they may affect your institution.  These revisions include changes to fees on collateralized and uncollateralized overdrafts, the elimination of the deductible, an increase in the fee waiver, and enhancements to collateral management.  Please share this invitation with colleagues at your institution.