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| | FRB: Testimony, Ferguson--Check Truncation Act--April 3, 2003 |
 | | Today, however, check truncation can only occur by agreement of the banks involved because existing law requires that, in the absence of an agreement, the original paper checks be presented or returned. |
 | | Currently, under typical check truncation arrangements, electronic information about a truncated check, rather than the original paper check, is presented to the bank on which the check is drawn. |
 | | The proposed legislation facilitates check truncation by creating a new negotiable instrument called a "substitute check," which would permit banks to truncate the original checks, to process the check information electronically, and to print and deliver substitute checks to banks and bank customers that want to continue receiving paper checks. |
| www.federalreserve.gov /boarddocs/testimony/2003/20030403 (2680 words) |
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