donald l kohn : investing in payment innovations - a federal reserve perspective remarks by mr donald l kohn, member of the board of governors of the us federal reserve system, at the 2006 payments conference, federal reserve bank of chicago, chicago, 11 may 2006. * * * i am pleased to have the opportunity to speak at this conference on investing in payments innovations. 1 we are living in a period of rapid innovation and technological change. the productivity of the u. s. economy accelerated in the mid - 1990s and productivity has grown at an even more rapid pace this decade, as new technologies and increasingly sophisticated capital equipment have made it possible to produce and deliver goods and services more efficiently and cost effectively. technological advancements have made the payments system a very dynamic part of the u. s. economic infrastructure. the increasing availability and convenience of payment alternatives, along with generally lower costs, have affected how people choose to pay for their purchases. payments that a few years ago were being made in paper form - - by checks or in cash - - are today being made electronically. indeed, a recent federal reserve study found that the number of retail electronic payments in the united states - - such as credit cards, debit cards, or automated clearinghouse ( ach ) payments - - exceeded check payments for the first time in 2003. on at least one network, debit card payments have recently surpassed credit card payments, reflecting the rapid growth in debit card use that has been evident for a number of years. given this changing environment, the federal reserve is planning to repeat its triennial retail payments survey next year to help quantify recent trends. the check - processing system is also evolving rapidly. the changing character of the payments business is challenging long - held assumptions about the payments infrastructure, as well as business relationships in the payments industry. my remarks today, which reflect my own thoughts and not necessarily those of the federal reserve board, will provide an overview of some of the recent changes in retail payments, the challenges of innovation, and the federal reserve ’ s role in the retail payments system. changes in the retail payments system for many reasons, i believe the pace of change we have experienced in the retail payments system over this past decade will continue or even accelerate. much of the needed electronic infrastructure is in place today, both in homes and at businesses. as new generations grow up in the pc age and as older generations become increasingly computer literate, people are becoming more comfortable with using electronic technology in their

roger w ferguson, jr : the new england economic adventure remarks by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the opening of the new england economic adventure at the federal reserve bank of boston, boston, 8 october 2003. * * * it is a pleasure to participate in the opening of the new england economic adventure at the federal reserve bank of boston. the educational possibilities presented by the adventure are truly exciting. the federal reserve system has a long history of involvement in economic education. an understanding of economic principles, especially the workings of markets, is fundamental to good decisionmaking - whether by workers, or employers, or public policymakers. i also confess to some self - interest in this regard. a better understanding of economics by the public makes the task of the federal reserve system easier. people may disagree with our policies - some may have different objectives and others may think different approaches to achieving those objectives would be more effective - but at least we are speaking the same language. they know what we are trying to do, and they know why. historically, much of our education effort has focused on increasing public understanding of the federal reserve system itself : how we are structured, the nature and scope of our mission, the monetary policy and supervisory tools at our disposal. providing information about the fed remains a key part of our programs. for the past ten or so years, we have been running the fed challenge, a competition in which teams of high school students engage in mock federal open market committee discussions and make recommendations regarding monetary policy. the quality of the analysis and the sophistication of the presentations have been impressive. by comparison, our own fomc deliberations seem a little dry ; for example, we on the fomc tend to be a little more low tech than the students, who come armed with very colorful computer - driven graphics to support their analysis and arguments. but teaching general economic principles has also been a recurring theme. a number of federal reserve banks work closely with the national council on economic education ( ncee ), which has a host of fascinating programs that make teaching and learning economics fun. gary stern, the president of the federal reserve bank of minneapolis, currently chairs the ncee, and i was privileged to address that group in may, 2002. in recent years, the federal reserve has increased its attention to financial literacy, an area that might be seen as the more practical, personal side of economic education.