Summary: GAO discussed check clearing services provided by the Federal Reserve System. GAO noted that the Federal Reserve has made significant progress since 1982 and that: (1) average revenue per check increased during 1983; (2) the Federal Reserve has begun pricing check float; and (3) it appears that the Federal Reserve is no longer subsidizing check clearing services. Private sector competitors of the Federal Reserve have raised concerns about its implementation of new check clearing policies, including: (1) market advantages accruing to the Federal Reserve as a result of its status as a central bank; and (2) concerns that subsidies may continue because not all costs associated with Federal Reserve check clearing operations have been identified. GAO noted that, while the Federal Reserve does enjoy some competitive advantages, it does not enjoy the same flexibility as private sector banks with respect to: (1) providing a broad range of services; and (2) discouraging the use of certain services by raising prices. GAO stated that it is unclear whether the comparative advantages balance. In addition, GAO noted that the Federal Reserve is taking action to reduce tension generated by its central bank status by: (1) more fully disclosing financial and program information; and (2) developing policies that define the bounds of its competitive actions.
