Operational error caused major outage in the Fed’s electronic financial services

Operational error caused major outage in the Fed's electronic financial services

The U.S. central bank’s computer system failure affects applications on which banks, companies, and federal agencies depend.

The Federal Reserve (Fed), the U.S. central bank, said Wednesday that it had resumed normal operation of Fedwire Funds, Fedcash, and bank check clearing services after a three-hour outage of more than a dozen critical payment services that form the backbone of the nation’s banking system. This was reported by many media outlets, including Reuters.

The Fed added that electronic applications were also restored: the National Settlement Service (NSS) and Fedwire Securities Services, which provide issuance, settlement, and transfer services for Treasury and other government securities.

“Our technical team has determined that the failure was caused by an operational error that occurred at the Federal Reserve System,” the Fed said in a statement Wednesday. Banks within the federal system did whatever was necessary to restore the Fedwire and NSS applications.

The outage began around 11:15 a.m. U.S. East Coast time, and four hours later, at 2:58 p.m., the Fed’s Web site was still posting an emergency announcement in several service areas.

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The affected services facilitate the cashing (clearing) of checks and allow multibillion-dollar payments to go through the financial system every day.

Fedwire Funds is the “leading wire transfer service that banks, businesses, and government agencies rely on for critical same-day transactions,” according to the Fed’s website.

Fedwire Funds processes an average of more than 835,000 transactions per day in December with an average daily volume of $3.4 trillion.