Recent pronouncements by the Federal Reserve may have some of our customers and constituents scratching their heads. On the one hand, we introduced a check standardization program which, in the future, will simplify the way that financial institutions purchase and manage electronic check services with any of the 12 Federal Reserve Banks. At the same time, we announced the launch of a second phase of research to assess the state of the retail payments system. The results of this study will help us better understand the attitudes, behaviors and potential barriers toward greater use of electronic payments.
To some it may appear that the Fed has conflicting goals in the payments arena—improving an outmoded form of payment like the check, while pushing for wider acceptance of electronic forms of payment. Do we want checks to go away, or don't we?
As we now know, reports of the demise of the check—some as many as 25 years ago—were greatly exaggerated. Our research indicates that the check will not disappear in the immediate future. Rather, the check will continue to coexist with other forms of payment. To accommodate the future and current demands of its customers, the Fed must modernize its existing payments services. Just as critical, however, is the Fed's need to look to the future and work with the private sector to foster electronic payments system improvements that yield even greater benefits to the public and the economy.
The Fed's overarching responsibility is to maintain an efficient, accessible, reliable and safe payments system. Taking actions to better serve our check-processing customers and check consumers while exploring ways to encourage the shift from paper to electronic payments is not in any way at odds with this mission. In fact, these activities are an illustration of our commitment.