Fed says 'operational error' caused payment system outage

UPDATE: Feb. 26, 2021: A Fed spokeswoman Thursday specified the error stemmed from "an automated data center maintenance process that was inadvertently triggered during business hours." Such tasks are normally performed after-hours, she told The Wall Street Journal, adding, "This was human error."

Dive Brief:

The Federal Reserve said an "operational error" caused outages at all 14 of its services Wednesday, including Fedwire Funds and its FedACH system.
"Our technical teams have determined that the cause is a Federal Reserve operational error," the central bank said in a post on its website. The Fed said it became aware of the disruption at 11:15 a.m. Eastern time Wednesday.
By the afternoon, almost all of the Fed’s services appeared to be back online, according to a status list on the Fed’s website.

Dive Insight:

The Fedwire Funds Service, Fedwire Securities Service and National Settlement Service resumed processing and are operating normally, the Fed said in a post at 3:14 p.m. Eastern time Wednesday. The central bank said FedACH had resumed as of 2:57 p.m. and customers should receive acknowledgments for incoming files.

"Please note that the backlog of files may take time to clear and do not resend files," the Fed said.

The Federal Reserve’s electronic payments network lets nearly 9,300 financial institutions send billions of dollars daily through the U.S. financial system, according to a Federal Reserve site.

Fedwire Funds in December handled more than 835,000 transactions a day, with an average daily volume of $3.4 trillion, according to Reuters.

The outage caused several cryptocurrency exchanges, including Gemini, Kraken and Coinbase, to experience delays, The Block reported.

"We acknowledge that payment deadlines are impacted and will communicate remediation efforts to our customers when available," the Fed said in a post.

The Fed experienced two significant service disruptions in 2019: one delaying transactions on the central bank’s automated clearinghouse system over the course of two days in December, and another in which “an internal technical issue" took down the FedWire interbank funds transfer service for about three hours in April.