, which could then be used with data from future surveys to track and analyze electronic banking. so, in an effort to establish some benchmarks, let me summarize briefly what reality appeared to be in 1995. our survey results indicated that, in 1995, use of an electronic technology to transact at a financial institution was common, but hardly the dominant form of conducting business. ignoring credit cards, which were widely used, the most commonly used instrument was direct deposit, a relatively old and well - established electronic technology. while an estimated 50 percent of households used direct deposit, this usage rate paled compared to that of the most commonly used means for transacting at a financial institution. the most common means was the “ in - person ” visit, employed by 87 percent of households. indeed, the second most popular technology was the mail, used by an estimated 57 percent of households. other electronic technologies, including even the telephone and atms, were employed by substantially smaller portions of the population. stored - value cards did not even show up in numbers sufficient to estimate reliably a national percentage, and use of the computer for transacting at a financial institution was scarcely out of its diapers as far as being a technology that households actually used. still, some form of electronic technology was utilized by almost 70 percent of american households, even excluding credit cards from the calculation. perhaps the most interesting and important results from our 1995 survey concerned the importance of education, income, financial assets, and age for the use of electronic banking products by us households. indeed, when trying to describe who used electronic banking it seemed difficult to underestimate the importance of education, even after controlling for factors such as income and age. an important break point appeared to be achieving at least a college degree, a level of education held by the heads of less than one - third of households. households with annual incomes below $ 25, 000 were particularly unlikely to use electronics, and households with annual incomes above $ 50, 000 appeared relatively likely to do so. in addition, households with heads under the age of 35 were considerably more likely to use atms, debit cards, and the computer. the only use of electronic technology that increased with age was direct deposit, a reflection of the importance of the direct deposit of social security payments. on balance, these results suggested that, in 1995, the potential market for relatively new electronic banking products was highly specialized. since 1995 the world of electronic banking has certainly changed.

produce unusual outcomes almost always give rise to continuous and inevitable moves back towards longer - run equilibrium. however, the violence of the responses to what seemed to be relatively mild imbalances in southeast asia in 1997 and throughout the global economy in august and september 1998 has illustrated yet again that the adjustments in asset markets can be discontinuous, especially when investors hold highly leveraged positions and when views about long - term equilibria are not firmly held. enough investors usually adopt strategies that take account of longer - run tendencies to foster the propensity for convergence toward equilibrium. but from time to time, this process has broken down as investors suffer an abrupt collapse of comprehension of, and confidence in, future economic events. it is almost as though, like a dam under mounting water pressure, confidence appears normal until the moment it is breached. risk aversion in such an instance rises dramatically, and deliberate trading strategies are replaced by rising fear - induced disengagement. yield spreads on relatively risky assets widen dramatically. in the more extreme manifestation, the inability to differentiate among degrees of risk drives trading strategies to ever - more - liquid instruments so investors can immediately reverse decisions at minimum cost should that be required. as a consequence, even among riskless assets, such as u. s. treasury securities, liquidity premiums rise sharply as investors seek the heavily traded “ on - the - run ” issues – a behavior that was so evident last fall. history tells us that sharp reversals in confidence happen abruptly, most often with little advance notice. these reversals can be self - reinforcing processes that can compress sizable adjustments into a very short time period. panic market reactions are characterized by dramatic shifts in behavior to minimize short - term losses. claims on far - distant future values are discounted to insignificance. what is so intriguing is that this type of behavior has characterized human interaction with little appreciable difference over the generations. whether dutch tulip bulbs or russian equities, the market price patterns remain much the same. we can readily describe this process, but, to date, economists have been unable to anticipate sharp reversals in confidence. collapsing confidence is generally described as a bursting bubble, an event incontrovertibly evident only in retrospect. to anticipate a bubble about to burst requires the forecast of a plunge in the prices of assets previously set by the judgments of millions of investors, many of whom are highly knowledgeable