The Clearing House (TCH) submitted a Comment Letter in response to the Federal Reserve’s plan to offer the FedNow service. TCH remains resolute in its ongoing efforts to expand real-time payments in the United States, so that every federally insured depository institution interested in participating in the RTP system will be able to offer its customers the benefits of real-time payments. The Federal Reserve can take actions to support the expansion of real-time payments by (1) treating the balance in the RTP joint account as reserves and paying interest on such reserves and (2) moving quickly to expand Fedwire Funds operating hours. TCH also responded to the Federal Reserve’s competitive impact analysis of the FedNow service, which will have a direct and material adverse effect on the ability of the RTP system to compete effectively due to certain legal differences between the Federal Reserve and TCH. TCH has suggested ways the Federal Reserve can mitigate this competitive impact, including by holding the FedNow service to the same standards that the RTP system is held to as a result of its use of the joint account and its status as a private sector service. Together these actions will help to create competitive equality between the private sector and the government and thereby mitigate the risk that a depository institution is disadvantaged if it wants to use the RTP system.
Download the full comment letter here.