The Fed says it will discontinue cheque processing at New York's East Rutherford Operations Centre and transfer the volume to Philadelphia in the second half of 2006. In total 140 jobs will be lost in New York, while 60 new positions will be created in Philadelphia.

Since 2003, the Reserve Banks have reduced the locations where they process cheques from 45 to 29, with another six closures already in the pipeline.

Gary Stern, chairman of the Reserve Banks' Financial Services Policy Committee and president of the Federal Reserve Bank of Minneapolis says: "The changes that we have implemented over the past three years have been good for the nation's payments system but difficult for our organisation as we have been required to reduce our staff."

In 2004, Reserve Banks' cheque volume declined at about a 12% rate. Further decline is expected in the coming years as consumers continue to shift from paper cheques to electronic payments. Payments processed via credit cards, debit cards, and through the automated clearing house system increased from about 30 billion transactions in 2001 to more than 44 billion transactions in 2003.