As you have read elsewhere in this Report, preparing for the
century date change is a top priority which all of our operating
departments addressed in addition to conducting their normal business
in 1998. The modifications and testing of our internal systems
are complete, and we are now focused on testing and retesting
both our contingency and event management plans.
Providing cost-effective and innovative services to the financial
services industry, the public, and the U.S. Treasury is a key
element of the San Francisco Reserve Bank's mission. From paper-based
payment services like cash distribution and check collection to
electronic payment systems like the Automated Clearing House (ACH)
and the large-dollar Funds Transfer and Book-Entry Securities
Systems, the Bank plays a key role in ensuring that the nation's
payment systems are reliable, efficient, and responsive to changing
An important initiative in 1998 was ensuring that banks with
interstate branch networks could manage their reserve account
and financial services relationships with the Reserve Banks on
a coordinated, nationwide basis through the new Interstate Branch
Banking account structure. Also in an effort to enhance the accessibility
and functionality of its services, the Bank piloted two "web-based"
services during the year: Check Image, which enables financial
institutions to view digitized images of their cleared items online,
and Cash Order and Deposit Notification.
One of the Bank's ongoing objectives is to promote the growth
of electronic payments and electronic collection of checks.
In 1998 the Bank expanded its innovative Automatic Bill Payment
Program that involves major utility companies and their banks
in encouraging their customers to sign up for ACH debit as a
means of bill payment. On the Check side, the Bank introduced
Front-End MICR, a family of electronic products that enables
depository institutions to take advantage of the full benefits
of electronic check collection and eliminate physical item processing,
thus improving overall efficiency in the payments system.
The Twelfth District is also leading a Systemwide effort to
improve error resolution and customer service by implementing
a common check adjustment processing system nationwide. Among
other features, Enterprise-Wide Adjustments will facilitate
consistent service levels across the System and streamline cross-district
adjustments processing. When this project is fully implemented,
it will be the largest distributed application in place in the
Federal Reserve System.
Mayan calendar is actually based on several calendars that, meshed
together, mark the movement of the Sun, the Moon, and Venus. The
Mayan divine calendar, the Tzolkin, pairs numbers one through 13
with 20 day names to create mixtures similar to our days of the
week pairing with dates in a months: 1-Imix, 2-Ik, etc., being similar
to Sunday the 1st, Monday the 2nd.
Mayan civil calendar, the Haab, consists of 18
20-day months, plus a short month of five days. The combined Tzolkin-Haab
cycle, known as the Calendar Round, covers approximately 52 years
before all of the cycles come back to the same alignment. It is
still used by people in the Mexican highlands. The Mayan Long Count
records periods longer than 52 years.
The Bank also spearheaded the Treasury Offset Program (TOP) for
the U.S. Treasury. The goal of TOP is to develop an automated
system to enable creditor agencies to locate delinquent debtors
and assist those agencies in withholding offsetting government
payments to those debtors. The potential financial benefit of
this initiative is substantial; in limited implementation, the
debt collected by TOP is already $5 million.
All offices of this Bank played a key role in informing and educating
the public about the redesigned Series 1996 $20 bill for several
months prior to its September unveiling. Media events, school
programs, speeches, and community partnerships served to promote
the redesigned bill, which incorporates the latest anti-counterfeiting
and low-vision features.
In another milestone involving currency -- in this case historical
-- the Bank's premiere collection of American Currency, which was
put on view in an exhibit in the lobby of the San Francisco office
in 1997, was made available to visitors worldwide on the Bank's web
site at www.frbsf.org/currency/. The audience for this magnificent
collection can now include currency experts, historians, students,
and the general public, regardless of location; they can take a virtual
tour of the exhibit -- 24 hours a day, seven days a week -- and explore
the U.S. history which forms the context for the displays.
Formulating and implementing monetary and bank regulatory policies
in a manner that keeps the economy healthy are primary functions
of the Federal Reserve. The Bank's Research area contributes
to this process by continually studying and analyzing current
economic and financial information which affects policy decisions.
In addition, its outreach efforts play a key role in interpreting
monetary policy and explaining the purposes and functions of
the Federal Reserve to the public.
A major challenge of the year was to respond to the currency
crisis in Asia with research, policy briefings, speeches, and
publications. Research analyzed the determinants of the crisis
and its severity as well as the spread of the crisis through
financial market linkages. In addition, a staff member provided
technical assistance to the Asia Development Bank Institute
on site in Tokyo for a month.
the 20 years which Rip had slept away on the mountainside, great
changes had takend place. While Rip had been sleeping peacefully,
a fierce war had been fought. Now he was no longer an Englishman
but an American.
Rip Van Winkle
The Sketch Book
The department, along with the Stanford Institute for Economic Policy
Research, presented a conference on "Central Bank Inflation Targeting,"
bringing together some 100 eminent economists from academia, the Federal
Reserve, and foreign central banks to discuss the advisability and
methodology of explicit inflation targeting. Another conference, co-sponsored
with the Federal Reserve Bank of Atlanta, addressed "Financial Modernization
and Regulation." It brought together Federal Reserve policymakers
and staff as well as academic economists to discuss the implications
of modernization for the design of financial regulatory policy.
Banking Supervision and Regulation
The Federal Reserve, along with several state and federal agencies,
supervises and regulates the nation's financial institutions to ensure
their financial soundness and compliance with banking, consumer, and
other applicable laws. Specifically, the Federal Reserve is responsible
for supervising all bank holding companies and their nonbank and foreign
subsidiaries; state member banks and their foreign branches and subsidiaries;
Edge Act and agreement corporations through which U.S. banking organizations
conduct operations abroad; and U.S. activities of foreign banking
The San Francisco Federal Reserve Bank has implemented a strategy
that focuses resources in areas of greatest need, investing in new
technology to increase overall effectiveness. The strategy also helps
to retain and develop high performing staff, and strengthen communication
and outreach with the banking community.
first day of the year 2000 on the Gregorian calendar as it
will look on various calendars:
Ahau 8 Kankin
78, year 16,
month 11, day 25
At the end of 1998 there were 70 state member banks in the District.
There were also 201 holding companies with assets of $374.9 billion,
106 agencies and branches of foreign banks, 15 Edge and agreement
corporation offices, and 29 representative offices.
Applications activity increased somewhat with 244 filings received
in 1998, compared to 234 in 1997. Two major cases last year which
involved considerable analysis and staff attention were the mega-mergers
of Bank of America with NationsBank and Wells Fargo with Norwest.
Applications to form bank holding companies decreased by 8 from
35 to 27.
Supervision and regulation staff also made significant contributions
to the Bank's outreach efforts on behalf of Y2K by participating
in numerous educational seminars throughout the District.
Important functions of the Community Affairs unit are to encourage
banks to work with community organizations to help meet the credit
needs of their communities and to monitor compliance with consumer
protection laws relating to credit. In keeping with this, they created
and facilitated a series of Sovereign Lending meetings to address
access to credit issues for Native American tribes in Washington,
Oregon, Idaho, and Utah. These seminars brought together tribal representatives,
local bankers, and government and nonprofit representatives. The program
has increased lending, spurred the creation of small business centers
on several reservations, improved relationships between bankers and
tribal representatives, and led to the adoption of uniform commercial
codes by several tribes.
Other workshops presented during the year encouraged banks' involvement
with nonprofit small business assistance providers and introduced
a new concept to provide funds to match deposits low-income customers
place in special savings accounts, helping them to reach specific