christine m cumming : enhancing payment system speed, efficiency and security keynote remarks by ms christine m cumming, first vice president of the federal reserve bank of new york, at the tch annual payments symposium and business meeting, new york city, 5 july 2013. * * * it is a great pleasure to be here today to speak to you about the evolution of the u. s. payments system and the federal reserve banks ’ role in that evolution. the views i express will be mine and not those of the federal reserve system or the federal reserve bank of new york, although i will draw on the considerable work being done in the federal reserve on the future payments direction. without question, we are living in an once - in - a - lifetime period of change in the u. s. payments system. payments providers are seeking ways to bring mobile technology to payments, an integration widely seen as a game - changer by payments industry participants. person - to - person payments mechanisms have grown rapidly, and the potential for those funds to be immediately credited to the receiver could be another game - changer. commerce increasingly integrates with a payments mechanism, especially as information about spending patterns are a source of value to firms and loyalty discounts and points become an important part of the business value proposition to customers. indeed, rather than talk about a payments industry, we find ourselves talking about a payments ecosystem, a web of banks, service companies, alternative payments providers and commercial firms. some have called these developments a second internet revolution. end - user demands and new industry participants ( i. e., non - banks ) are driving innovation, with technology enabling faster processing, more convenience to users, and the extraction and use of valuable information that accompanies payments. as the term “ second internet revolution ” implies, these developments represent another instance of high levels of innovation, fueled by disruptive technology, challenging traditional business models. but this time, they are not just any business models – they are our business models. how are end - users driving innovation? let me mention my personal hypothesis : that we may be seeing fundamental change in the way households, small businesses and some merchants manage their finances. we ’ re seeing trends in financial data and bankers are seeing the trends in practice : less reliance on debt and closer attention to cash balances to manage spending. some nonbank e - wallet providers are facilitating the management of the points, coupons and discounts that have become an important source of value to customers

to take steps to mitigate the vulnerability of the economy to a sharp rise in long - term rates. this includes monitoring banks ’ exposure to duration risk and the quality of their risk management and capital planning, while also looking outside of the banking system because some risks may reside elsewhere. in this regard, agency mortgage reits and the risk of large outflows from bond mutual funds are issues that deserve ongoing attention. conclusion the fomc is committed to the dual objectives of maximum sustainable employment in the context of price stability. currently we are falling well short of our employment objective and the restrictive stance of federal fiscal policy is a factor. on inflation, we are also falling short, but by a considerably smaller margin. as a consequence, we need to keep monetary policy very accommodative. i do not claim that there are no costs or risks associated with our unconventional monetary policy regime. but i see greater cost and risk in moving prematurely to a policy setting that might not prove sufficiently accommodative to ensure a sustainable, strengthening recovery. bis central bankers ’ speeches i remain confident that the benefits of a stronger and earlier economic recovery will trump the costs associated with our unconventional monetary policy measures. thanks for your kind attention. i would be happy to take a few questions. bis central bankers ’ speeches