to centralize operations of many of their mission critical applications, such as fedwire, automated clearing house ( ach ), and accounting. continued technological advance, as well as further consolidation in the financial services industry, is likely to lead to further specialization among regional federal reserve banks. new strategic planning activities in the face of accelerating change, the federal reserve recently recognized the need for a more comprehensive planning framework. in 1995, a system strategic planning coordinating group was appointed, consisting of board members, reserve bank presidents and senior managers, representing the full range of the federal reserve ’ s activities. this group produced an “ umbrella ” framework, designed to enable the board, the reserve banks and product and support offices to produce their own more detailed plans and decision documents under the “ umbrella. ” this framework, which is the basis for the document submitted to the house and senate banking committees, sets forth the mission of the federal reserve referred to above. it also discusses the “ values ” of the federal reserve, the goals and objectives of the fed, key assumptions, as well as the external and internal factors that could affect the achievement of those goals and objectives. with the overall framework as a reference point, strategic planning activities are proceeding with new energy at the reserve banks, at the board, and with respect to cross - cutting major functions such as the payments system and bank supervision and regulation. individual reserve banks have reviewed their operations from the ground up and reassessed their structure and effectiveness in carrying out their missions. some of the banks have launched fundamental re - engineering efforts that are resulting in substantial changes in management structure and operations. the federal reserve bank of chicago calls its effort “ fresh look ” ; the federal reserve bank of cleveland is engaged in “ transformation : 2000. ” board planning and budgeting at the board, we have restructured the annual planning and budget process to put more emphasis on planning ( and less on detailed line - item budgeting ), to lengthen the planning and budgeting horizon, and to involve the board itself more heavily in setting priorities. to this end, we have established a budget committee of the board ( consisting of myself and governors phillips and kelley ) assisted by a staff planning group drawn from across the major functions of the board. we are working with a four - year planning horizon and intend to produce the board ’ s first biennial budget ( 1998 / 1999 ) to go into effect on january 1, 1998. our hope is that the new process and structure will give the board a

the quality and quantity of research and analysis produced by the fed ’ s research staff. conclusion gpra provides the opportunity for a major improvement in the management and effectiveness of federal agencies. it provides the impetus for agencies to clarify their missions and objectives, measure their performance better and improve their efficiency and effectiveness. it must, however, avoid the risk of becoming, like some previous efforts to improve government management, largely a paper exercise which produces many numbers and reports but few real results. the federal reserve welcomes the opportunity to participate in the gpra process. we will work hard to fulfill the vision of the framers of the act and avoid the pitfalls. we will have to respond in ways that are appropriate to the federal reserve ’ s diverse missions and decentralized structure. i believe we have made significant progress toward the gpra - type strategic planning and are on the track to making more in the immediate future.