Federal Reserve Board invites public comment on proposed changes to its Policy on Payment System Risk that governs the provision of intraday credit.
WASHINGTON, DC (STL.News) The Federal Reserve Board on Friday requested public comment on proposed changes to its Policy on Payment System Risk (PSR policy) that governs the provision of intraday credit, or daylight overdrafts, to healthy depository institutions with accounts at the Federal Reserve Banks.
The PSR policy establishes limits on the value of an institution’s uncollateralized daylight overdrafts, which occur when a depository institution’s Federal Reserve account is in a negative position during the business day. The Reserve Banks provide intraday balances by supplying temporary, intraday credit to healthy depository institutions to foster the smooth operation of the payment system. The PSR policy also allows institutions that might otherwise be constrained by those limits to request additional collateralized capacity.
The proposal would modify the PSR policy to (1) expand access to collateralized capacity and (2) clarify the terms for accessing and retaining uncollateralized capacity. The proposal targets expanding options for higher levels of intraday credit capacity and does not propose any reductions of the current terms for providing uncollateralized access. Additionally, the Board proposes to modify the PSR policy and the Policy on Overnight Overdrafts to align them with the FedNow?