• Federal Reserve to Implement Changes to Payment System Risk Policy
  • July 15, 2010
  • Law Firm: Alston Bird LLP - Atlanta Office
  • Yesterday, the Federal Reserve Board announced plans to implement certain previously adopted changes to its Payment System Risk (PSR) policy in early 2011. Although a precise date has not been identified, the Federal Reserve stated that it will provide at least 90 days advance notice.

    According to the Federal Reserve, “[t]he Revised PSR policy explicitly recognizes the role of the central bank in providing intraday credit to healthy depository institutions predominately through collateralized daylight overdrafts” and “encourages institutions to pledge collateral to cover daylight overdrafts.”

    To prepare for the increased collateral management needs of depository institutions, the Federal Reserve noted that “[t]he Reserve Banks have been implementing enhancements to their operational systems and processes that will improve efficiency and effectiveness of pledging, withdrawing, and monitoring collateral.”