[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-324658-105":59,"doc-detail-324658-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","payment-system-risk-issues-economic-commentary","Payment System Risk Issues - Economic Commentary","","Economic Commentary summarizes amendments adopted or proposed to the Federal Reserve System’s existing payment system risk policy beginning May 31, 1989. It explains how payment system risk arises in both Federal Reserve and private large-dollar-value electronic payment systems, focusing on daylight overdrafts, irrevocable versus non-irrevocable payments, and credit-risk exposure when a paying bank cannot repay by day’s end. It also outlines systemic risk and key international issues across onshore and offshore networks.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/payment-system-risk-issues-economic-commentary/324658/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/payment-system-risk-issues-economic-commentary/324658.png","ImageObject",300,407,{"name":92,"@type":93},"Noah","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-01","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":52},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"Why did the Federal Reserve begin amending its payment system risk policy on May 31, 1989?","Question",{"text":112,"@type":113},"The Board began amending the policy as an outgrowth of a two-year examination of interconnected international, domestic, and operational issues involved in reducing payment-making risks.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"How does a daylight overdraft create payment system risk on Federal Reserve networks?",{"text":117,"@type":113},"Daylight overdrafts occur when a bank’s payments exceed its account balance during the day, creating an uncollateralized Federal Reserve Bank loan. Because payment is irrevocable, the Federal Reserve absorbs the risk if the paying bank fails by day’s end.",{"name":119,"@type":110,"acceptedAnswer":120},"What is systemic risk in private large-dollar payment networks?",{"text":121,"@type":113},"Systemic risk refers to the possibility that one bank’s unexpected failure prevents counterparties from meeting their obligations, which then cascades through payment failures and could disrupt the entire financial system.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},324658,1790417813,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":52,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},8796095462418,"https://ap-avatar.wpscdn.com/avatar/80000253c1241d02b47?x-image-process=image/resize,m_fixed,w_180,h_180&k=1778826106357471780","by E.J.Stevens  \nAt its May 31,1989 meeting,theBoard of Govemors of the FederalReserve System began amending its ex-isting payment system risk policy.Theamendments adopted or proposed arethe outgrowth of a two-year examina-tion of the interrelated set of internation-al,domestic,and operational issuesinvolved in reducing the risks created inmaking payments.  \nPayment system risk issues arise inboth Federal Reserve and private large-dollar-value electronic payment sys-tems.Risk exists in these networkswhen payments are financed by a spe-cial form of lending.  \nFederal Reserve Bank lending to banksis most familiar when it is donethrough the discount window,at the dis-count rate,secured by eligible collat-eral,to be repaid one or more days later.Less familiar is the special form of lend-ing called a daylight overdraft,whichoccurs when a bank's payments exceedthe balance in its account for some por-tion of the day.This net debit creates akind of uncollateralized Federal Re-serve Bank loan,made and to be repaidduring the course of a single bankingday,automatically,and at no charge.Inprivate networks,such net debits repre-sent loans to participants who have paidmore than they have received,and areextended by those who have receivedmore than they have paid.  \nStarting in 1986,the Board's initialpolicy simply required each bank to seta limit on its daylight overdrafts(in-  \n# Payment System Risk Issues\n\ncluding net debits on private systems)The need for a more fully articulatedpolicy is suggested by the broad rangeof payment system risk issues nowrecognized.This Economic Commen-tary examines the broad outline ofthose issues.  \n## ■ Payment System Risk\n\nAll payments carry some risk of loss.Cash risks counterfeit;checks risk in-sufficient funds and the failure of apaying bank prior to collection.Inthese familiar cases,long-establishedlaw and regulation allow counterpartiesto deal with their eyes open to risk.  \nRisk assignment in large-dollar-valueelectronic payments is neither uniformamong networks nor acceptable to theFederal Reserve.On Federal Reservenetworks,payments (totaling about$600 billion daily)provide immediate,irrevocable credits to receiving bankseven when paying banks have insuffi-cient balances to cover their payments.In effect,the resulting daylight over-drafts(averaging about $120 billiondaily)represent loans from the FederalReserve.  \nIrrevocable payment means that theFederal Reserve absorbs all risk that apaying bank in daylight overdraft willfail at the end of the day.Private large-dollar-payment networks have adaylight overdraft feature,but no com-parable risk-absorber because pay-ments are not irrevocable,nor are theynow subject to any well-defined risk-as-signment law or regulation.  \nJune 15,1989  \nAn effective payment system riskpolicy must deal with complex,some-times-interrelated issues.These rangefrom how to devise a workable inter-national division of labor amongsovereign bank-regulatory agents,allthe way to the basic operational ques-tion of how to define a real-timedaylight overdraft that includes off-line activities.  \nDaylight overdraft volumes mush-roomed over the past 20 years,in con-nection with the telecommunicationsrevolution,the globalization of bankingand securities markets,and the explo-sion in volume of financial market ac-tivity,especially for ovenight financing.  \nBanking practices increasingly cameto rely on free Federal Reservedaylight credit.Introduction of real-time accounting systems assisted somebanks in managing their own daylightexposures in this environmentFederalReserve accounting systems operate ona real-time basis only in monitoringproblem banks and some specialized in-stitutions.In general,Federal ReserveBanks do not prevent daylight over-drafts,but,since 1986,attempt to con-trol daylight credit risk exposures  \nThe risk involved with daylight creditis that,at the end of a day,a payingbank might be unable to repay its day-light overdraft either at a Federal Re-serve Bank or on a pr","cbCaigyBwm4igVSM","https://ap.wps.com/l/cbCaigyBwm4igVSM","pdf",1183057,"English","# Payment System Risk Issues\n## Payment System Risk\n## International Issues","[{\"question\":\"Why did the Federal Reserve begin amending its payment system risk policy on May 31, 1989?\",\"answer\":\"The Board began amending the policy as an outgrowth of a two-year examination of interconnected international, domestic, and operational issues involved in reducing payment-making risks.\"},{\"question\":\"How does a daylight overdraft create payment system risk on Federal Reserve networks?\",\"answer\":\"Daylight overdrafts occur when a bank’s payments exceed its account balance during the day, creating an uncollateralized Federal Reserve Bank loan. Because payment is irrevocable, the Federal Reserve absorbs the risk if the paying bank fails by day’s end.\"},{\"question\":\"What is systemic risk in private large-dollar payment networks?\",\"answer\":\"Systemic risk refers to the possibility that one bank’s unexpected failure prevents counterparties from meeting their obligations, which then cascades through payment failures and could disrupt the entire financial system.\"}]","Payment System Risk Issues - Economic Commentary | PDF",1789968527,13]