In 2003, the Fed processed checks at 45 locations across the country. With the latest announcement that the Federal Reserve Banks would discontinue check processing at its operations center in East Rutherford, N.J., the number of locations will decline to 22 by the end of 2006.
"The step announced today will help the Reserve Banks reduce our check service operating costs in line with the continuing shift in consumer and business preferences for electronic payments," said Gary Stern, chairman of the Reserve Banks' Financial Services Policy Committee and president of the Federal Reserve Bank of Minneapolis, in a statement.
The shuttering of the check processing sites parallels the decline of the paper check. The Fed estimates that 37 billion checks were paid in the United States in 2003, down from about 42 billion in 2001 and 50 billion in 1995. The Federal Reserve processes a significant number of those checks, handling over 12 billion checks in 2004.
The Federal Reserve currently employs approximately 4,000 people in its check processing operations, including 140 East Rutherford-based employees who will be affected by the announcement. The Fed intends to achieve a net reduction in head count of 80 employees, after considering reassignments and added employees at its Philadelphia location.
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