payments coordination by which banks use incoming payments to fund their own transfers to other banks. once a number of banks began to be short of incoming payments, some became more reluctant to send out payments themselves. in effect, banks were collectively growing short of liquidity. we recognized this disturbing trend toward illiquidity in the pattern of funds movement among the accounts held by commercial banks at the federal reserve. before september 11, banks held approximately $ 13 billion in their fed accounts. in the days after september 11, these balances ballooned to more than $ 120 billion because some banks could not move funds out of their accounts. the large buildup of federal reserve account balances was limited to only a few banks, but it meant that a number of other banks were running huge negative positions in their federal reserve accounts and needed to find other sources of liquidity before the close of business. further evidence of disruption in the flow of payments among banks at this time is quite clear from data for the federal reserve ’ s large - value electronic payment system, known as fedwire. banks use fedwire to make payments to one another to settle their customers ’ as well as their own transactions. just before september 11, the number of transfers sent over fedwire on a normal day was around 430, 000, with a total value of $ 1. 6 trillion. on september 11, the number of transfers was down more than 40 percent, with fewer than 250, 000 transfers being sent over fedwire, and the total value was down 25 percent. if liquidity had continued to dry up, both business and consumer confidence could have been severely affected. imagine businesses unable to promptly withdraw funds from checks deposited in their banks, even though those checks paid for goods or services already provided. imagine international banks running out of dollars, a serious impediment to international trade and finance. as we know now, the situation never reached those extreme conditions because, fortunately, the federal reserve system has numerous means providing liquidity. one tool used to provide needed liquidity was the discount window, through which the fed lends in certain circumstances to help banks maintain smooth day - to - day operations. in essence, in more normal times the discount window serves a function similar to that of a pressure valve. during the crisis, as the volume of borrowing requests increased dramatically, the discount window served as something closer to the floodgates of a great dam. on september 12, lending to banks through the discount window totaled about $ 46

declined, especially in response to growing international competition. the failure of our society to enhance the skills of a significant segment of our workforce has left a disproportionate share with lesser skills. the effect, of course, is to widen the wage gap between the skilled and the lesser skilled. in a democratic society, such a stark bifurcation of wealth and income trends among large segments of the population can fuel resentment and political polarization. these social developments can lead to political clashes and misguided economic policies that work to the detriment of the economy and society as a whole. as i have noted on previous occasions, strengthening elementary and secondary schooling in the united states - especially in the core disciplines of math, science, and written and verbal communications - is one crucial element in avoiding such outcomes. we need to reduce the relative excess of lesser - skilled workers and enhance the number of skilled workers by expediting the acquisition of skills by all students, both through formal education and on - the - job training. although the long - run challenges confronting the u. s. economy are significant, i fully anticipate that they will ultimately be met and resolved. in recent decades our nation has demonstrated remarkable resilience and flexibility when tested by events, and we have every reason to be confident that it will weather future challenges as well. for our part, the federal reserve will pursue its statutory objectives of price stability and maximum sustainable employment - the latter of which we have learned can best be achieved in the long run by maintaining price stability. this is the surest contribution that the federal reserve can make in fostering the economic prosperity and well - being of our nation and its people.