Last week the Federal Reserve Board (the “Fed”) issued a discussion paper entitled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” (the “Paper”). The Paper explores the advantages and disadvantages of the Fed issuing a central bank digital currency (CBDC or digital dollar); key design considerations of such a currency; and seeks feedback from the public on 22 specific questions directed at those topics. Comments are due by May 20, 2022. Given that Congress has indicated its interest in the Paper, digital asset and financial services industry participants should use this opportunity to have their voices heard by the Fed and members of Congress.Read More
By John ReVeal
More than three years after proposing amendments to the Regulation CC to add new indemnities for remotely deposited checks (cheques), new warranties for electronic checks and electronic returned checks and new indemnities for electronically-created items, the U.S. Federal Reserve has at last issued final rules. These new rules also modify the expeditious return rules, including by making electronic returned checks subject to those requirements. The final rules were issued on May 31, 2017, and will take effect on July 1, 2018.
Perhaps the rules of most importance to the banking and emerging payments industries are those providing for indemnities for remotely deposited checks. An inherent problem with remote deposits is that the person depositing the check retains the original paper check and can negligently or intentionally deposit or cash it again. The bank on which the check is drawn will usually refuse to pay it twice, as it should. This leaves the writer of the check, the bank that accepted the remote deposit, and the bank or check cashing store that accepted the original paper check arguing over who should take the loss. Under current rules, unless the parties have entered into side agreements to allocate losses, the bank or check store paying the original check can normally bring a Uniform Commercial Code (UCC) holder-in-due-course claim against the check writer and that person has no remedy unless recovery is possible from the negligent or crooked payee that cashed the item twice.
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