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    GAO Explores Settling Hundreds of Billions in Retail Sales on Weekends

    WASHINGTON, DC - A General Accounting Office (GAO) report released on Friday is exploring for the first time the costs, benefits and legal issues involved to speed the settlement of the hundreds of billions of dollars collected in weekend transactions by food retailers.

    WASHINGTON, DC - A General Accounting Office (GAO) report released on Friday is exploring for the first time the costs, benefits and legal issues involved to speed the settlement of the hundreds of billions of dollars collected in weekend transactions by food retailers.

    The report, "Weekend Settlement: Potential Benefits, Costs, and Legal Issues," addresses the fact that funds, mostly cash, obtained on weekends cannot be immediately infused into U.S. economy because the transactions currently cannot be settled on weekends.

    "In the retail food industry alone, approximately $250 billion in sales on Fridays, Saturdays and Sundays cannot be invested until the transactions are settled when banks reopen on Mondays," commented Tim Hammonds, president and CEO of the Food Marketing Institute. FMI introduced the idea of weekend settlements and has discussed it with the Federal Reserve Board, the American Bankers Association, the Senate Banking Committee and House Financial Services Committee. Through these efforts and others, the GAO was asked to research the issue.

    The benefits to consumers and retailers include faster access to their funds, according to the report. Weekend settlements would also enable retailers to reduce the amount of cash in stores subject to robberies, which could lower insurance costs. In addition, banks would be freed from the burden of settling the large amounts of weekend transactions on Mondays.

    The report found that there are no legal obstacles to weekend settlements. The principal obstacle, according to financial institutions, is the cost for the additional computers and staffing to operate during weekends. Banking officials say they would have to create a parallel transaction-processing system in case the primary system fails, increasing operating costs by up to 40 percent.

    "If such costs are the main barrier," said Hammonds, "that is good nnews. Food retailers have been running parallel production systems that back up transactions, along with stand-alone systems that test operations on a 24/7 basis. The industry has used these systems for years at a cost far below banking industry estimates. Consumers and financial institutions would benefit from upgraded backup systems to ensure the safety and security of their assets."

    The GAO report noted that two of the world's largest centers of finance, Hong Kong and Singapore, settle transactions on Saturdays.

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