Collection of Checks and Other Items by Federal Reserve Banks and Availability of Funds and Collection of Checks

Résumé

In March 1998, the Board issued an advance notice of proposed rulemaking requesting comment on the benefits and drawbacks associated with its same-day settlement rule, which became effective in January 1994. The same-day settlement rule, which is part of Regulation CC, requires paying banks to settle in same-day funds for checks presented to them by private-sector banks by 8:00 a.m. local time at a location specified by the paying bank. The Board also requested comment on the implications of potential rule changes to reduce or eliminate the remaining legal disparities between Federal Reserve Banks and private- sector banks in the presentment and settlement of checks. The Board considered whether such changes would enhance the efficiency of the interbank check collection market, the check collection process, and the payments system as a whole. Based on its analysis of the comments received, the Board concluded that the costs associated with reducing the remaining legal disparities would outweigh any payments system efficiency gains. Therefore, the Board has decided not to propose any specific regulatory changes at this time to reduce these remaining legal disparities.