Commercial Paper, Bank Deposits and Collections, and Other Payment Systems

The legal rules governing commercial paper, bank deposits and collections, and other payment systems are undergoing substantial change as a result of federal and state legislative, regulatory, and judicial developments. In 1987, Congress expanded the scope of the Federal Reserve's authority over the payment system. The Board of Governors of the Federal Reserve System approved a Federal Reserve Bank redeposit service for returned small-dollar checks during 1987. The Board also enacted several amendments to the comprehensive program it adopted in 1985 to address the risk of settlement failure in the context of a large-dollar payment network, i.e., a risk control program. The Board also extended the risk control program to the automated clearinghouse service. For the future, the Federal Reserve envisions an all-electronic, around-the-clock payment system serving primarily: 1. immediate payments, 2. same day or future day transfers for recurring consumer payments, and 3. corporate trade payments. A mandatory, next-day availability schedule goes into effect on September 1, 1988.