The Federal Reserve’s system that allows wire money transfers collapsed with intermittent interruptions for about 2 hours on Wednesday.
The outage impacted clients, which include financial institutions, banks, brokers, and mortgage loan providers, and also their capacity to move funds in huge and small amounts.
“The disruption caused a payment backlog to build up at banks, which they began working through once the issue resolved. The Fed told clients that “the backlog of files may take time to clear.”
The issue didn’t pose a major problem for large lenders, some of which cleared their backlogs just a few hours after the systems came back online, according to people with knowledge of the banks’ operations.
Some banks began exploring contingency plans regarding how they would shift their operations if Fedwire remained down for a prolonged period but ended up not employing them.
Aaron Klein, a senior fellow at the Brookings Institution, said the glitch underscored broader problems with the Fed’s payments systems, in which checks can take two business days to clear.
Central banks in other countries—including England, Brazil and Mexico—implemented instant payment systems more than a decade ago. The Fed doesn’t anticipate doing so until 2023.”Source