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What is Fedwire?
Fedwire stands for Federal Reserve Wire Network. It is a high-speed electronic communications network that links the
Federal Reserve Board of Governors, the 12 Federal Reserve Banks and the 24 branches, the U.S. Treasury Department, and other federal agencies.
The transmission contains inter-bank codes that are changed continually a reference number the names of the sending and receiving banks the transfer amount the name and account number of the sending account holder the receiving account holder.
A Fedwire is an electronic transmission. The transmission contains inter-bank codes that are changed continually a reference number the names of the sending and receiving banks the transfer amount the name and account number of the sending account holder the receiving account holder.
General Background
The Fedwire
owned and operated by the Federal Reserve System is a real-time gross settlement (RTGS) system consists of a set of procedures and computer applications to route
balances, and notify participants of related credits and debits to their accounts.
is supported by the Federal Reserve's FEDNET national
communications network
Operating Hours
The Fedwire Funds Service business day begins at 9:00 p.m. eastern time (ET) on the preceding calendar day and ends at 6:30 p.m. ET, Monday through Friday, excluding designated holidays. IST : 7.30 a.m to 5 .00 a.m
Fedwire Usage Approximately 9,500 participants are currently able to initiate or receive funds transfers over Fedwire. Daylight Overdraft An overdraft that must be repaid by the close of business the same day. U.S Federal Reserve allows daylight overdrafts, Hong Kong does not
Pricing
The Monetary Control Act or 1980, requires a federal reserve to recover fully the cost associated with the provision of the most financial services it provides
Fedwire Participants
Depository institutions Agencies and branches of foreign banks Member banks of the Federal Reserve System U.S. Treasury and authorized agencies Foreign central banks, foreign monetary authorities, foreign governments, and certain international organizations; and Any other entities authorized by a Reserve Bank
How is it done?
Basic Domestic Transfers:
Tranferiing BANK -> FEDERAL RESERVE -> RECEIVING BANK YOUR BANK -> MEMBER BANK -> FEDERAL RESERVE ->
Fedwire
complies with each of the 10 Core Principles meets the preferred standards for settlement assets and
finality U.S. law provides a well-established legal foundation for Fedwire and settlement finality.
procedures for the management of credit risks and liquidity risks, which specify the respective responsibilities of the system operator and the participants and which provide appropriate incentives to manage and contain those risks.
Core Principle IV: The system should provide prompt final
settlement on the day of value, preferably during the day and at a minimum at the end of the day.
takes place should, at a minimum, be capable of ensuring the timely completion of daily settlements in the event of an inability to settle by the participant with the largest single settlement obligation.
Core Principle VI: Assets used for settlement should
preferably be a claim on the central bank; where other assets are used, they should carry little or no credit risk and little or no liquidity risk.
of security and operational reliability and should have contingency arrangements for timely completion of daily processing.
Core Principle VIII: The system should provide a means of making payments which is practical for
publicly disclosed criteria for participation, which permit fair and open access.
Core Principle X: The system's governance arrangements
Large dollar time-sensitive payments (>3M) Funds transfers between reserve banks Purchases or sales of Federal Funds transfers between correspondent banks Sales of book-entry U.S. Government securities Collection of tax and loan accounts in commercial banks
TAN Q