Many large banks with significant correspondent banking networks have historically offered check-clearing services to downstream correspondents as a core component of their product mix. Through consolidation, some of those banks have discontinued all or parts of their correspondent banking services. Others have promoted their check-clearing services, as the incremental cost of clearing checks is small relative to their existing fixed-cost structure.
As we have said on numerous occasions, such reforms are needed to increase the growth of real GDP and employment on a sustainable basis.