Moskow, Michael H. and Federal Reserve Bank of Chicago "[Speech at the] Indiana Corporate Credit Union (Indicorp) Annual Economic Forum (Outline)." October 23, 1998, https://fraser.stlouisfed.org/title/5967/item/581369, accessed on April 27, 2025.

Title: [Speech at the] Indiana Corporate Credit Union (Indicorp) Annual Economic Forum (Outline)

Date: October 23, 1998
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image-container-0 INDIANA CORPORATE CREDIT UNION (INDICORP) ANNUAL ECONOMIC FORUM Indianapolis, Indiana October 23, 1998 ..................................................................... I. Introduction A. Good morning. I’m pleased to be here and appreciate the invitation. • Conferences like this provide me with a chance to discuss some issues related to the Fed, but more importantly they give me a chance to hear your ideas and questions. • The importance of soliciting and responding to feedback from our customers and stakeholders is something we’re stressing at the Chicago Fed. B. This morning I’d like to discuss three areas where we work together — financial services, Year 2000 preparations, and the economy. But first, let me give you a little background about the Federal Reserve. C. As the nation’s central bank, our mission is to foster a safe and sound financial system and a healthy, growing economy. We have three main responsibilities • providing financial services to depository institutions and the U.S. government; • supervising and regulating state member banks and bank holding companies; • and formulating national monetary policy. D. The Chicago Fed is one of 12 regional Reserve Banks and serves a five-state area consisting of most of Indiana, Illinois, Michigan, and Wisconsin, and all of Iowa. • We have a head office in Chicago as well as offices in Detroit, Des Moines, Milwaukee, Peoria, and Indianapolis. 445 Michael Moskow Speeches 1998
image-container-1 II. Electronic Banking A. Turning now to financial services, I’d like to discuss electronic payments. Let me read you a prediction. • “In banking…the advances of yesterday are merely a faint prologue to the marvels of tomor- row. In our lifetime we may see electronic transactions virtually eliminate the need for cash.” • Many people would agree with that statement today. However, that prediction was made back in 1965, by Thomas J. Watson, then president of IBM. B. We’re still not close to a paperless or even a checkless society. But there is growing momentum in the electronic payments area. Electronic payments seem to be tantalizingly close to achieving critical mass. Consider the following statistics: • The dollar value of ACH transactions last year was more than $11 trillion — almost a 10 [9.9] percent increase from 1996. • Over 200 million debit cards were issued by U.S financial institutions last year. • On-line business transactions totaled an estimated $7.5 billion in the U.S. last year. Many project a dramatic increase during the next four years. • A very small percentage of U.S. households used Internet banking last year — no more that 1 or 2 percent. But some estimate usage will accelerate quickly in the next two years. C. But Americans still wrote about 63 billion checks and share drafts, last year. According to one study, the average American signs about 270 checks each year; the average German signs 10. D. Why is it important to use electronic payments? • I know I don’t have to convince you about the importance of electronics payments. You’re already moving full speed ahead with your recent agreement with the EFT network, Magic Line (R). This is clearly the direction to be moving. • I firmly believe our financial system is enhanced by the use of more efficient, cost-effective electronic payments. • So a shift to electronics is very much in keeping with the Fed’s mission to foster a healthy economy and a stable financial system. E. I say that even though check services provide the Fed’s main source of service revenue. • Ideally, I’d like to see our check service evaporate as electronic payments become more pop- ular. But, as I said, we don’t expect that any time soon. • According to one estimate at a recent Chicago Fed conference, the share of noncash, electron- ic transactions is expected to rise from 23 percent in 1995 to nearly 50 percent by 2010. • That’s a dramatic increase in electronics, but we’ll still have a lot of checks. 446 Michael Moskow Speeches 1998
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Date: October 23, 1998
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