Federal Reserve electronic systems that enable US banks to send each other electronic payments experienced a massive outage on Wednesday afternoon. A Fed statement attributed the outage to an “operational error” but didn’t provide much more detail.
The Federal Reserve System acts as America’s central bank, and it controls much of the plumbing of the US financial system.
The automated clearing house (ACH) system is used for paychecks, bill payments, and other small and medium-sized transactions across the economy. The Check 21 system is used for clearing paper checks. It takes one to two days for these transactions to clear.
The Fedwire system is used to instantly wire large sums of money from one bank to another. The system moves more than $3 trillion on an average day.
All of these systems and a few others were down for more than an hour on Wednesday afternoon.
By 3:30pm on Wednesday, most of these systems were back in service, but the Fed warned banks that it would need time to work a backlog of transactions through its system. The Fed urged banks to double-check that any transactions they submitted in recent hours had actually gone through.