One mission of the Federal Reserve and its leaders is to support payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments.
The Federal Reserve provides mechanisms for the settlement of payment transfers between banks — the actual movement of funds from one account to another. For example, as a provider of financial services, the Reserve Banks store currency and coin. Federal Reserve Financial Services also offers the FedNow® Service to financial institutions as an infrastructure for instant payments, as well as checks and electronic payment processing through Fedwire® Funds Service wire transfers and automated clearinghouse (ACH) electronic credit and debit transfers.
Over the years, numerous Federal Reserve Bank presidents have been champions of payments modernization, innovation (Off-site) and financial inclusion. Here are brief profiles of three such champions who have spoken in recent years at the Chicago Payments Symposium (Off-site).
Raphael W. Bostic
Dr. Raphael Bostic is president and chief executive officer of the Federal Reserve Bank of Atlanta and a member of the Fed’s Payments Committee, which provides governance oversight to FRFS. As an economist educated at Harvard and Stanford universities, Bostic is particularly interested in how the payment system can foster financial inclusion (Off-site).
For example, he worked with FRFS chief payments executive Mark Gould and others to co-author a paper, “Connecting the Dots: How Adoption of Instant Payments Can Lead to a More Inclusive Economy” (Off-site). Under Bostic’s leadership, the Federal Reserve Bank of Atlanta offers particularly robust payments information on its website. See its Retail Payments Risk Forum (Off-site) and enjoy the Take on Payments (Off-site) blog.
Esther L. George
Esther George retired from the Federal Reserve in 2023 after serving for 11 years as president and chief executive officer of the Federal Reserve Bank of Kansas City. George was a sponsor of the Federal Reserve’s payments improvement initiative, which led to development of the FedNow Service (Off-site) for instant payments.
Upon her retirement (Off-site), George recalled that when she began working for the Kansas City Fed in 1982, “Checks were a prominent form of payment, and we processed them by the truckload.” Now, checks are mostly processed electronically using digital image capture – and electronic payments across credit and debit networks have grown exponentially as speed and efficiency have begun to dominate the payments landscape.
Loretta J. Mester
Dr. Loretta Mester is president and chief executive officer of the Federal Reserve Bank of Cleveland and chair of the Fed’s Payments Committee. Her tenure as president will end in June 2024 in accordance with Fed policies. In a recent speech (Off-site), she explained, “The Federal Reserve System has responsibility for fostering a safe, efficient, and widely accessible payments infrastructure, and the Reserve Banks have provided payments and settlement services alongside the private sector for more than 100 years. The Fed has this responsibility because as the country’s central bank, it can uniquely provide interbank settlement without introducing liquidity or credit risks. Settlement refers to the debiting and crediting of accounts to transfer funds for a payment.”
This is the first in a series of Fed360 articles featuring Federal Reserve leaders of note in payments.
