and effective execution of the plan, the federal reserve provides several different payment services, such as fedwire, ach, check, and cash ; therefore, the banking industry is not totally dependent upon any single system for executing payments. alternatives are available in the event of a disruption in a segment of the electronic payment system. we recognize that despite their best efforts, some depository institutions may experience operating difficulties, either as a result of their own computer problems or those of their customers, counterparties, or others. these problems could be manifested in a number of ways and would not necessarily involve funding shortfalls. nevertheless, the federal reserve is always prepared to provide information to depository institutions on the balances in their accounts with us throughout the day, so that they can identify shortfalls and seek funding in the market. the federal reserve will be prepared to lend in appropriate circumstances and with adequate collateral to depository institutions when market sources of funding are not reasonably available. the terms and conditions of such lending may depend upon the circumstances giving rise to the liquidity shortfall. our preparations for possible liquidity difficulties also extend to the foreign bank branches and agencies in the u. s. that may be adversely affected directly by their own computer systems or through difficulties caused by the linkage and dependence on their parent bank. such circumstances would necessitate coordination with the home country supervisor. moreover, consistent with current policy, foreign central banks will be expected to provide liquidity support to any of their banking organizations that experience a funding shortfall. closing remarks as i indicated at the outset, the federal reserve views its year 2000 preparations with great seriousness. as such, we have placed a high priority on the remediation of date problems in our systems and the development of action plans that will ensure business continuity for the critical financial systems we operate. while we have made significant progress and are on schedule in validating our internal systems and preparing for testing with depository institutions and others using federal reserve services, we must work to ensure that our efforts remain on schedule and that problems are addressed in a timely fashion. in particular, we will be paying special attention to the testing needs of depository institutions and the financial industry and are prepared to adjust our support for them as required by experience. we believe that we are well - positioned to meet our objectives and will remain vigilant throughout the process. as a bank supervisor, the federal reserve will continue to address the industry ’ s preparedness, monitor progress, and target for

- entry securities against a simultaneous payment, called delivery - versus - payment, thus reducing the settlement risks of market participants. about 8, 000 depository institutions use the fedwire securities transfer service to transfer each year approximately 13 million securities valued at over $ 160 trillion. the average total daily value of fedwire securities transfers is about $ 650 billion. the ach is an electronic payment service that supports both credit and debit transactions and is used by approximately 14, 000 financial institutions, 400, 000 companies, and an estimated 50 million consumers. typical credit transactions include direct deposit of payroll and corporate payments to suppliers. typical debit transactions include the collection of mortgage and loan payments and corporate cash concentration transactions. the ach processes transactions in batches one or two days before they are scheduled to settle. ach transactions are settled through depository institutions ’ accounts at the federal reserve banks. approximately 4 billion ach transactions were processed in 1996 with a total value of approximately $ 12 trillion. about 3. 3 billion of these payments were commercial transactions ; 625 million payments were originated by the federal government. the reserve banks ’ critical applications, such as fedwire funds and securities transfer, ach, and supporting accounting systems, run on mainframe computer systems operated by federal reserve automation services ( fras ), the internal organizational unit that processes applications on behalf of the federal reserve banks and operates the federal reserve ’ s national network. these critical applications are “ centralized ”, that is, one copy of the application is used by all twelve reserve banks. in addition to centralized applications on the mainframe, the federal reserve banks operate a range of applications in a distributed computing environment, supporting business functions such as cash distribution, banking supervision and regulation, research, public information, and human resources. the reserve banks also operate check processing systems that provide check services to depository institutions and the u. s. government. a national communications network, called fednet, supports the exchange of information among the reserve banks, fras, and external organizations. the scope of the federal reserve ’ s year 2000 activities includes all of these processing environments and the supporting telecommunications network. year 2000 readiness it is crucial that the federal reserve provide reliable services to the nation ’ s banking system and financial markets. the federal reserve is giving the year 2000 its highest priority, commensurate with our goal of maintaining the stability of the nation ’ s financial markets and payments systems, preserving public confidence, and supporting reliable government operations. we are taking a comprehensive