June 15, 2006

Request for public comment on a consultation paper pertaining to intraday liquidity management and the Board's Payment System Risk Policy

For immediate release

The Federal Reserve Board on Thursday requested public comment on a consultation paper that is intended to help the Board obtain broader information on intraday liquidity management issues and to lay the groundwork for discussions about the long-term evolution of its Payment System Risk (PSR) Policy.

The consultation paper seeks information from the financial industry and other interested parties on their experience in managing intraday liquidity, credit, and operational risks associated with Fedwire funds transfers and associated transactions. In particular, the paper requests views on potential changes in market practices, depository institution and Federal Reserve Bank operations, and the Board's PSR Policy that could reduce one or more of these risks, while maintaining or improving the efficiency of the payments system over the long run.

The consultation paper includes a brief list of possible changes that might further assist depository institutions, financial markets, and the Federal Reserve Banks in managing intraday risks. Items on the list should be regarded as preliminary and intended for further study.

The consultation paper stems from the Federal Reserve's ongoing review of the long-term effects of market, operational, and policy changes by the financial industry and the Federal Reserve on intraday liquidity and risks in the financial markets and the payments system, including account overdrafts at the Reserve Banks.

Comment is requested by December 15, 2006.

The Board's consultation paper is attached.

Last Update: June 15, 2006