The Federal Reserve System has bought an image-based archive and retrieval system for U.S. government checks from Banctec Inc., Dallas.

The Federal Reserve Bank of Boston will lead the design and installation of Banctec's OpenArchive image-based check processing software and hardware system.

Officials said the system would let the Fed store images of welfare checks, tax refunds, and other U.S. government-issued checks indefinitely. Terms of the deal were not disclosed.

Grahame N. Clark Jr., Banctec's chairman and chief executive, said the relationship with the Fed was the fruit of pilot programs the company began in 1993.

In that year, the Fed hired Banctec to develop a prototype system for capturing digitized images of government checks. It was an effort to demonstrate the use of such systems in check truncation and electronic check-image presentment.

Based on that effort, Mr. Clark said, the latest contract "is intended to replace all present-day methods for processing U.S. government checks."

"As these images of checks arrive at one of their processing centers, they will be truncated and cleared as an image," Mr. Clark said.

"This initiative could have the capability of supporting future electronic presentment of commercial checks," he added. "It could go beyond just the U.S. government checks."

More than 450 million such government checks are microfilmed annually at the central bank's processing centers.

Checks are subsequently reconciled by the Treasury's Financial Management Service in Washington.

Using the new system, authorized government officials will be able to gain access to check images at any time from any location, said Dexter Holt, an assistant vice president at the Boston Fed.

The Federal Reserve plans initially to install the imaging system at three processing sites within 12 months.

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