. this sluggishness has been due in part to the severity of the financial shock associated with the crisis and the persistent headwinds to recovery in its aftermath. but the lack of fiscal support for demand in recent years also helps account for the weakness of this recovery compared with past recoveries. 1 in the united states, fiscal policy has been much less supportive relative to previous recoveries. for instance, at a comparable point in the recovery from the 2001 recession, employment at all levels of government had increased by about 800, 000 workers ; in contrast, in the current recovery, government employment has declined by about 650, 000 jobs. lessons what lessons can we draw from this experience? the first is that governments need to address long - term challenges and significantly improve their structural fiscal balances during good times so they have more fiscal space to provide stimulus when times turn bad. when poor economic conditions drive policy interest rates close to the zero lower bound, fiscal stimulus may be more effective than usual in boosting aggregate demand because it will not have the usual effect of raising real interest rates, thereby crowding out private demand. 2 a second lesson is that, while even if it is appropriate for fiscal policy to play a larger role when policy rates are near zero, policymakers nevertheless may face constraints in implementing fiscal stimulus. this means that central banks need to be prepared to employ all available tools, including unconventional policies, to support economic growth and to reach their inflation targets. see greg howard, robert martin, and beth anne wilson ( 2011 ), “ are recoveries from banking and financial crises really so different? ” international finance discussion papers 1037 ( washington : board of governors of the federal reserve system, november ). see, for instance, lawrence christiano, martin eichenbaum, and sergio rebelo ( 2011 ), “ when is the government spending multiplier large? ” journal of political economy, vol. 119 ( february ), pp. 78 – 121 ; and j. bradford delong and lawrence h. summers ( 2012 ), “ fiscal policy in a depressed economy, ” brookings papers on economic activity, spring, pp. 233 – 97. bis central bankers ’ speeches a third critical lesson pertains to the importance of having a sound and resilient financial sector with strong capitalization and prudent risk management, supported by effective regulation and supervision. the recent crisis has appropriately increased the focus on financial stability at central banks around the world. at the european

paper check to the paying bank unless the paying bank had agreed to accept presentment of the check electronically. while check 21 did not mandate the electronic processing or presentment of checks, it did authorize a new negotiable instrument, called a substitute check, which is the legal equivalent of the original check. by permitting banks to use substitute checks in the check - collection process when the recipient could not or would not accept electronic presentment, check 21 has facilitated the expanded use of electronic technologies in check processing, enabling the banking industry to improve the efficiency and cost - effectiveness of its check - processing operations over the long run. the magnetic ink character recognition ( micr ) line is the line of numbers printed near the bottom of the check, which generally includes the paying bank ’ s routing number, the customer ’ s account number, the check number, and the amount of the check. the ach is seen as a potentially attractive option because it is an electronic system that reaches all depository institutions and could eliminate the need to print substitute checks. the flow of check information over the ach system raises the legal question of whether the payments should be characterized as checks or electronic fund transfers. if the payments were characterized as checks, under current check law banks can choose whether to receive presentments electronically or in paper form. a key principle underlying check 21 was to maintain this choice by permitting banks to participate in electronic check processing when their business case justified doing so. requiring banks to accept electronic check presentment simply because they participate in the ach system and have agreed to abide by nacha rules might be viewed as contrary to this principle. alternatively, if the payments were characterized as electronic funds transfers, then how would banks obtain the authorizations required under regulation e to convert the transactions into ach payments? when evaluating the relative benefits of using the ach network for these payments, we must consider these threshold legal questions. a perspective on the future u. s. check system the checkless society has been predicted for decades ; however, as we near 2007, we know that even though checks are used less frequently, they are still used widely. industry experts are understandably wary of predicting what lies ahead for the u. s. check system. however, as we engage in strategic discussions on the future of checks and contemplate investments in check - processing infrastructure, we need to consider how the check system might evolve. let me take a first step and offer one perspective. the decline in check use