What can the Federal Reserve bring to the table? First and foremost, we can convene the industry and, as needed, drive toward consensus. We can bring strong research and analysis to the table. We can synthesize the large volume of payments research developed by industry, think tanks, consultants and academics, as we’ve already done for ourselves, as well as provide research by Federal Reserve economists. We can analyze use cases, as we’ve done over the last six months. And to help shape the consensus, we can draw on the basic principles that have guided Federal Reserve provision of payments services over the postwar period: access, efficiency, security and resiliency. Historically, the Federal Reserve’s focus has been on the interbank clearing and settlement of payments, operating efficiency, such as the conversion from paper to electronics, technologies that extend and improve accessibility, and infrastructures and services that are robust to security threats. Moving forward our strategy maintains emphasis on those key areas, but expands our focus to the flow of a payments transaction from end to end, enduser to end-user. The vision is to make sure the core services we provide enable and encourage innovation among payments providers who serve the end-users at the two ends of the payment. The end-to-end view means that payment initiation and delivery of good funds to end-users in the future state need to be timely, cost-effective, safe and easy. When we talk about timeliness and a faster payments system, what exactly does that mean?

If the loops don’t communicate, we fall short of the network opportunities that checks, debit and credit cards, and ATM cards offer. The tremendous potential in mobile lies in the eventual speed and quality of the end-to-end experience and in the security of any information on the device or in transit, tough challenges simultaneously to engineer. And beyond mobile payments, achieving the speed and general availability of faster payments seen or planned for in the United Kingdom, Australia and other countries requires tremendous coordination across the payments industry. So, how does the Federal Reserve fit into this period of extraordinary change and challenge? BIS central bankers’ speeches  1  The Federal Reserve has long championed access, including nationwide connection, coordination, as well as the security, efficiency and resiliency of the nation’s principal payments mechanisms. In light of the tremendous increase in payments innovation, last fall the Federal Reserve Banks launched a new strategic plan for Federal Reserve Financial Services. We’re asking how our services may need to change to facilitate the direction of the payments market and how we could enable existing and future innovation by the payments industry. The Federal Reserve Banks are actively engaged in adjusting our planning, our product development and our resources to address innovation in the marketplace. To do that, however, we need to build consensus within the industry around a broad direction, around the benefits of access and connectivity across the nation, and about understanding and managing the risks of new technologies and new business models that emerge.