WASHINGTON-Treasury Undersecretary for Domestic Finance Peter Fisher announced last week that EE Series savings bonds can be purchased on the Internet as the agency begins to phase out paper savings bonds for electronic versions. Consumers will be able to access their accounts through the TreasuryDirect Web site at www.treasurydirect.gov. While conversion of existing paper bonds to e-bonds is not mandatory, Treasury is encouraging it, according to Fisher. The paperless EE bond will be slightly different from the paper version in that it can be made in any amount, to the penny, from $25 to $30,000 as opposed to only being available in denominations. By the end of 2004, he said the department should be completed with the enhancements to the Web site, including additional registration options similar to the current EE series for minors and trusts, allow for payroll deductions, and have in place a process to transfer paper bonds to book entry form. Treasury is still working out the kinks as to who and how the data of current bonds will be transferred, Fiscal Assistant Secretary Don Hammond explained. "We're still trying to develop exactly how that would work," he said, "where you would actually take your bonds or mail your bonds for presentment and conversion and obviously if you can imagine, given the incredible volume of outstanding bonds, we also have to have a rational way of looking at it, rolling it out, and balancing the workload." This summer the Treasury Department is initiating a public awareness campaign for current savings bond holders. Once it determines that 65% of savings bond holders are aware of their electronic options, Fisher said the government plans to announce that about a year or so later, the elimination of paper bonds being issued. Treasury is continuing to work with other agencies, employers, libraries, and financial institutions regarding Internet access issues, he emphasized. The I Bond became available through TreasuryDirect in October 2002. Currently there are 19,000 accountholders with TreasuryDirect holding $112 million in Series I savings bonds, according to Treasury. "We anticipate that it will be a very popular feature. There are a lot of people that have a lot of savings bonds and to be able to maintain the exact same ownership interest that they have today as well as the characteristics of the bonds-purchase date, interest rates-so we want to make sure we make that available in an efficient and effective way," Hammond said. All of the series' savings bonds, Fisher said, account for $195 billion and 700 million paper certificates. The paper-based program now costs approximately $154 million annually to administer and the electronic shift should result in significant savings to the government. "This is the route that we're taking because our duty is to raise money for the federal government efficiently," Fisher said. Hammond followed up, "We have an effectively popular savings bond program today; it's also incredibly costly. If we're going to be able to maintain that savings option and that means of access into buying Treasury securities in small denominations into the future, we have to move to all electronics. What we're passing back to the consumer is, not only the increased convenience and flexibility of an electronic program, but, frankly, the future of the capability of offering savings bonds. If we continue in the environment we're in today, with all the cost efficiencies that are around us in all other environments, that poses a very real risk to the program in its entirety." Paper EE savings were first issued in 1980 and were derived directly from the Series E bonds, first issued as Defense Bonds in May 1941. Series I bonds were first issued in September 1998. -

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