It is a bold assertion, but not necessarily an unreasonable one, reflecting the dollar value of transactions processed across the Fedwire Funds, Fedwire Securities, and National Settlement Services; the interconnectedness and dependencies between these services and other systemically important infrastructures; our role as central securities depository and as fiscal agent for the issuance, maintenance, and redemption of all Fedwire-eligible securities; and as the platform across which the Federal Reserve ultimately settles its monetary policy operations. Any one of these elements would likely qualify the wholesale services as “systemic”; in the aggregate they represent a staggering portfolio on which the execution of both our nation’s fiscal and monetary policies ultimately depends. In recognition that a wholesale service outage risks a significant shock to the United States, and in light of the escalating threat landscape in which collectively we operate, last year before this audience I shared a series of reflections endeavoring to advance a new paradigm for resiliency and security for financial market infrastructures. This year I’d like to provide an update on our progress on this front, and then to elaborate on the portfolio of wholesale service initiatives that we are endeavoring to advance to add value for customers and end users. As always, my remarks reflect my own views and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System.
Reflecting the Federal Reserve’s historical interest in the mitigation of settlement risk, and in anticipation of the emergence of real time retail payments in the United States, we are currently exploring an expansion in operating hours of the National Settlement Service to support the final and irrevocable settlement of interbank positions in central bank money. We are pursuing this interest in three phases. In 2015, we expanded the NSS operating window modestly, opening an hour earlier at 7:30am and closing a half hour later at 5:30p.m. Subsequently, we announced our readiness to open NSS as early as 9:00 p.m. on the prior calendar date, consistent with the operating window of the Fedwire Funds Service, if requested. Finally, we are currently evaluating prospects for weekend settlement hours, perhaps encompassing a 24x7 operating window for NSS, for which we are validating demand prior to finalizing our direction. It is critical to consider these matters in advance of the advent of real time retail payments to anticipate the needs of customers and to respond to the interests of policy makers. The Federal Reserve’s Strategies for Improving the Payment System also aspire to achieve greater end-to-end efficiency in cross-border payments, an historical pain point for end users. In support of this interest, and following an exhaustive season of consultation with industry leaders, we are currently in the midst of a multi-year effort to adopt the ISO 20022 payment message formats for the Fedwire Funds Service.