We have a lot to be proud of in the Eighth District. Our check-processing sites in Little Rock, Louisville, Memphis and St. Louis are among the most efficient in the Federal Reserve System. But every prudent business, including the Federal Reserve, must adapt to significant changes in the marketplace.
Nationwide, we know consumers are choosing the efficiency of electronic payments, such as ACH and debit cards, over checks. One of the Fed's objectives is to promote an efficient payment system, so we endorse these trends.
As consumers adopt electronic payment alternatives, recent definitive research indicates check usage is declining, and we must re-engineer our check operations. So last fall, the Fed's Conference of Presidents met to develop a plan for boosting revenues and cutting costs. After much debate, a final decision was announced in February. Between now and the end of 2004, Reserve bank check-processing sites will be reduced from 45 to 32, and check-adjustment sites will be reduced from 43 to 12.
Closing our District's Little Rock and Louisville check-processing sites will allow our District to save $4.9 million a year. That's a number we couldn't walk away from, but we have not forgotten our mission to provide high-quality service.
Throughout the transition, all Reserve banks will work to maintain deposit times and availability as close as possible to current service levels, and our new check-imaging and check-adjustments technology will allow us to offer additional services.
Likewise, because we care about our affected employees and we want them to remain with us throughout the transition, we've offered them generous severance and retention benefits. This will ensure that our sites continue operating fully and efficiently.
You have my promise that for the next 18 months it really will be business as usual at the St. Louis Fed. We have not yet worked through all the details of the re-engineering initiative, but we will communicate any changes as soon as we know them. For upcoming announcements, visit our web site.