FEDERAL RESERVE: FEDWIRE GOES DOWN
According to several users on different social media, Fedwire, the real-time gross settlement system, owned and operated by the 12 Federal Reserve banks in the US, went off for a few minutes today, April 2nd.
One of the users has taken the matter to Reddit, detailing the following:
Today the United States Federal Reserve experienced an unexpected issue and went completely down. No incoming or outgoing wires went through in the entire country. It’s still unresolved and yet not one single news outlet seems to be reporting on this and the massive impact it has.
According to the official website that monitors the current status of the services provided by the Federal Reserve, Fedwire Funds has since been enabled.
However, an Instagram user managed to screenshot the status page at the time when it was off.
WHAT IS FEDWIRE FUNDS?
Fedwire is the system for real-time gross settlement of central bank money used to electronically settle USD payments amongst its members. The system is owned and also operated by the 12 Federal Reserve Banks in the US.
However, it’s a massive network for payment processing in between the member banks, as well as other institutions which participate. These include American branches of foreign banks, depository financial institutions and so forth.
To get a sense of the massive scale of its operations, Fedwire has processed upwards of $2.8 trillion on a daily basis in January 2019. In comparison, Bitcoin transferred upwards of $3.2 trillion for the entire 2018.
WHY DOES IT MATTER?
Fedwire Funds plays a crucial role in processing payments between member banks throughout the entire country. As such, while being offline, transactions were reportedly delayed or failed.
The user who brought up the Reddit thread mentioned above, explains the severity of the issues associated with Fedwire’s downtime:
I work in a job that requires wire transfers and all wires were not sent or received after about noon/1 ish west coast time. I assume most people weren’t as aware because of the typical cutoff time anyway. But we had several deals today that couldn’t be completed because none of the banks could send us money and we couldn’t send any out either.
WILL WE EVER LEARN?
While there doesn’t appear to be an explanation for Fedwire’s recently reported downtime, it’s yet another example of the issues with centralized systems. This is not the first time it happened, as Visaand Wells Fargo had experienced issues of the kind in the past. However, it does seem like if things don’t change, we’re likely to see more of the same.
Decentralization could solve a lot of the vulnarabilities that are inherent to centralized systems and single points of failure. It’s perhaps problems like this that further highlight the strength of Bitcoin which, up to the current date, boasts 99.9835% uptime since inception.
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