##marking survey. for a review, see olivia mitchell, brett hammond, and anna rappaport, forecasting retirement needs and retirement wealth, university of pennsylvania press, 2000. based on the federal reserve board's 2001 survey of consumer finances. nellie liang and scott weisbenner, " investor behavior and purchase of company stock in 401 ( k ) plans - the importance of plan design, " feds working paper 2002 - 36 and nber working paper w9131, 2002. see also shlomo benartzi and richard thaler, " [UNK] diversification strategies and retirement savings plans, " american economic review, vol. 91 ( 2001 ), pp. 79 - 98. nellie liang and scott weisbenner, " investor behavior and purchase of company stock in 401 ( k ) plans - the importance of plan design. " see also shlomo benartzi, " excessive extrapolation and the allocation of 401 ( k ) accounts to company stock, " journal of finance, vol. 56 ( 2001 ), pp. 1747 - 64. yet many workers believe that their employer's stock is less risky than broad market averages. what explains this apparent disconnect? as someone who held a large fraction of my own 401 ( k ) plan in my company's stock for many years, perhaps i can help answer this question. there is a difference between risk and uncertainty. employees may feel less uncertain about the prospects of the company for which they work relative to other companies about which they know little. this may make them more comfortable about holding their company's stock - even at the cost of a poorly diversified and highly volatile portfolio. to summarize, experience has shown that while 401 ( k ) plans offer workers unprecedented flexibility in managing their pensions, some workers do not seem to be using them effectively - they contribute too little, make questionable investment choices, or fail to participate at all. in response, some employers have expressed increased interest in employer - provided financial education. but employers'attention to plan design turns out to be just as important. contrary to predictions of traditional finance theory, the way retirement - plan options are framed to workers affects the choices they make. this is where the new discipline of behavioral finance has begun to offer significant contributions. some of the most innovative and apparently effective ideas about retirement - plan design owe to the insights of behavioral finance. as compelling evidence that framing matters, researchers have found that so - called " opt - out

of new technologies to conduct traditional payment system operations in more efficient and effective ways will also drive change. both banks and end - users of the payment system are now discussing many issues and ideas. the committee has asked a group of staff to conduct further discussions with interested organizations and bring back to the committee a broader view of the current debate in this area. finally, the committee is continuing to encourage survey research on the use of different payment systems. the federal reserve's retail payment office is currently sponsoring several surveys to obtain more accurate data on both electronic and check payments being made in the united states. it is particularly important that we have a better idea of how many checks are being written in order for the banking industry and the public to understand better and plan for the evolution of the payment system. the technical work of “ cleaning the numbers ” collected in the surveys is continuing, and we hope to publish data from the survey later in the year. conclusion in conclusion, i would like to emphasize that our financial system is continuing to evolve, as it must in a dynamic and competitive market economy. financial consolidation at the national level has occurred relatively quickly, although much less so at the level of individual banking markets. the recent g - 10 study did not find fundamental problems with developments to date. it did, however, outline some practical steps the authorities can take to help better manage potential risk to the financial system and outlined a number of areas that should be monitored and analyzed further over the longer term. overall, the us payment system continues to evolve slowly, but there have been steady changes and a great deal of experimentation over the past few years. although we are not likely to see paper payment instruments disappear, electronic payment systems are being used more widely and creatively than in the past. on - line banking and other services are giving bank customers new and convenient mechanisms to initiate and receive electronic payments. however, simple ideas such as electronic bill payment by consumers and businesses have turned out to be more of a challenge than we imagined a few years ago. in addition, as the market continues to experiment with new systems, the old themes of reliability, security, privacy, and confidence need to be repeated often. speaking as a member of the payments system development committee, i would also like to emphasize the willingness of the committee members and the fed staff to discuss with private - sector organizations their new ideas, insights, and views about the future of the payment system. i have found that our discussions so far have all been very productive