The Board’s 1994 same-day settlement rule enhanced the ability of correspondent banks to compete with the Federal Reserve Banks in collecting checks. The Board adopted this rule because it believed it was in the best interest of the payments system, even though it knew the rule would reduce the Reserve Banks’ check volume.
Our goal was competition in the check collection market, not preserving Federal Reserve market share. As I mentioned earlier, even with the same-day settlement rule, correspondent banks may still have difficulty competing with Federal Reserve Banks in some check collection markets due to their more limited presentment abilities.