and the implementation of the automated clearinghouse, or ach system, in partnership with the private sector. this operational role has allowed the federal reserve to support the goal of a safe and efficient payment system throughout its history. it has also contributed to widespread public confidence in the nation ’ s payment infrastructure. at times, the federal reserve has taken extraordinary steps to ensure the payment system can function reliably. after planes were grounded on september 11, 2001, in the aftermath of the terrorist attacks in new york and washington, d. c., the federal reserve arranged alternative transportation for millions of checks that normally would have moved across the country by plane. the federal reserve also started giving immediate credit for all checks that it received. this provided a key source of liquidity for the payment system and temporarily caused the daily float held by the federal reserve to increase over 6, 000 percent. 7 after september medley, highways of commerce, 105, https : / / www. kansascityfed. org / ~ / media / files / publicat / highwasyofcommer / highwaysofcommerce. pdf? la = en. - 511, the federal reserve also took steps to improve the future efficiency of the nation ’ s check collection system by working with congress on the passage of the check 21 act in 2002. a safe and efficient payment system also needs to be accessible, because payment services are most valuable when you can pay anyone regardless of where balances are held. the ultimate success of any effort to modernize the u. s. payment system depends on adoption across the entire banking industry. therefore, in considering the federal reserve ’ s provision of payment services, congress took steps to try to ensure access to services across the country. as a result, congress specifically tasked the federal reserve with taking into account an adequate level of services nationwide when providing and setting fees for payment services. 8 the united states has a highly complex banking system with more than 10, 000 depository institutions spread over wide areas with differing payment needs. 9 over 4, 800 of those are community banks. 10 in many areas, particularly rural areas, community banks may be the primary providers of banking services for individuals and small businesses. community banks are, therefore, essential in ensuring access to safe and efficient payment services in towns, cities, and rural communities nationwide so that payments can move across the country regardless of geography — from here in the south, to the midwest, and coast to coast. the monetary control act of 1980

##te ) that will serve as an accessible central hub for stakeholders interested in learning about and engaging with the federal reserve on - 10 innovation - related matters. 11 the web page can serve as a starting point for members of the industry to engage with federal reserve specialists, submit questions, and request inperson meetings. we also announced a series of “ fintech innovation office hours ” across the country. the first of these was held just yesterday here in atlanta, and some of you may have even had the opportunity to participate. these are also an important opportunity for us to learn, and i encourage you to provide your feedback. for community banks and their potential fintech partners, i hope that these sessions will serve as a resource to meet one - on - one with federal reserve staff members with relevant expertise, discuss fintech developments, share specific projects, and ask questions. they also provide us an opportunity to hear directly from banks and fintech companies about challenges to innovation. another important area of focus for me is community banks ’ relationships with their vendors and third - party service providers. as a former community banker, i am acutely aware that community banks are often reliant on outside service providers and vendors to access new technologies and provide payment services. i also know that supervisory expectations in these areas can be challenging, and i have experienced it myself. there are several things i believe we can do to help provide clarity and transparency, reduce confusion, and simplify and remove some of the burden community banks face in this area. first, in order to give community banks a better picture of what success in due diligence of third - party providers looks like, and where it begins and ends, i believe that we should release more information on its necessary elements. this change would see https : / / www. federalreserve. gov / aboutthefed / innovation. htm. - 11 provide clarity and assist community banks in completing their work. in particular, i believe that regulators can provide more clarity on the types of questions that should be asked of a prospective third - party provider and our view of a satisfactory answer. i also believe our guidance should explain what due diligence looks like for a potential fintech partner, because the standards applied to other third parties may not be universally applicable. potential partnerships are not one - size - fits - all. every bank has different objectives, and guidance should reflect some supervisory flexibility so that we do not impede prudent, strategic partnerships between community banks