- effective government. on the first point, many lessons can be drawn from the downward swing in the housing industry, ranging from those that individual consumers can learn at the micro level, to those that financial companies can learn about investment and oversight. in that regard, the federal reserve has proposed new rules to strengthen regulatory oversight and to protect consumers in the future, and we continue to assess this episode to determine what more can be done to help homebuyers and homeowners. of course, one of the most effective ways to help consumers is to empower them with information. and this gets to our first case for economic and financial literacy : improving consumers'economic decision making will enhance the effectiveness of new rules and regulations. and while we at the federal reserve are charged with regulatory duties, we certainly see the value of education and the positive impact it can have on the broader economy. while the current troubles in the housing industry stem from a number of causes, a better - informed citizenry would likely have resulted in more - prudent decision making and, consequently, less harm to the economy. in the matter of the national economy, here the call for economic education is based on the idea that a better - informed citizenry makes for better economic policymaking. this is a subtle argument, but its logic is no less clear. as my friend alan blinder, the noted princeton economist and textbook author, as well as the former vice chairman of the federal reserve's board of governors, has said, an uneducated citizenry can lead to simplistic policy solutions, and those solutions are usually suboptimal. " the fact that the basic level of economic literacy in the country, indeed in the world, is so low, " alan has said, " is one of the things that leaves the political process so vulnerable to this malady. " 1 now, even alan would admit that it's difficult to draw a direct line from economic literacy to economic policymaking, but politicians listen to their constituents at home, just as they are supposed to do. and at a time when our elected officials are confronted with a myriad of options to address a slowing economy, or when they consider the increasing fears about a globalizing economy, it's fair to ask whether they are getting good economic counsel from their constituents. this is not to say that there is only one valid answer for these complicated questions, but it does mean that we get a better answer when we are all better informed

and international markets. other desirable features might enable data to flow seamlessly through the internal systems of the purchaser, the seller, and perhaps intermediaries - - all at a low cost, of course. because the products or services, scale, and complexity of business - to - business transactions vary widely, satisfying the needs of this diverse market may be more difficult than satisfying those of the other markets. i have heard reports, however, that many banks and other organizations are aggressively seeking ways to provide services for this market. the federal reserve in the payment system now, turning to the role of the federal reserve, recall that one reason that the congress established the federal reserve was to improve the nation's payment system ; the federal reserve act of 1913 provides the foundation for the federal reserve to establish a national check - clearing system. today, the reserve banks distribute cash, clear checks, and provide electronic payment services to banks. in addition, the federal reserve system has had a long - standing role in helping to formulate public policies that improve the overall efficiency of the nation's payment system and reduce risks. recently, evolving technology and growth in alternatives to cash and check payments have raised questions about the federal reserve's role in the payment system. in 1996 and 1997, a committee headed by alice rivlin, then the federal reserve vice chair, studied the federal reserve's operational role in the payment system. ultimately, the study concluded that the federal reserve should continue to provide all its existing payment services with the explicit goal of enhancing efficiency, effectiveness, and convenience, while ensuring access for all banks. the study also recommended that the federal reserve work actively, closely, and collaboratively with providers and users of the payment system, both to enhance the efficiency of check and ach services and to help develop strategies for moving to the next generation of payment instruments. to follow up on the recommendations of that study, the federal reserve created the payments system development committee, which i co - chair with cathy minehan, president of the federal reserve bank of boston. the payments system development committee has an explicit mission. in addition to identifying strategies for enhancing the long - term efficiency of the retail payment systems, it also identifies barriers to innovation and works to address those barriers where possible. the committee is active in monitoring developments in payment markets and has sponsored workshops and forums that encourage focused discussions with the private sector. our current activities include efforts to reduce legal and regulatory barriers to payment innovation, examine future clearing and settlement