updated 3/22/2005 5:43:23 PM ET 2005-03-22T22:43:23

It is time to dig into the sock drawer in search of that savings bond from Aunt Martha. The Treasury Department announced Tuesday that it has launched a program to convert existing paper bonds into electronic securities.

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The program, dubbed SmartExchange, isn't mandatory, but Treasury officials are hoping that holders of the existing 760 million paper bonds will take them up on their conversion offer.

"Exchanging paper for electronic securities marks another step in moving savings bonds from a paper-based, labor intensive program to an all-electronic product," Van Zeck, the Treasury's commissioner of the public debt, said in announcing the new program.

Treasury plans to phase in the conversion, offering it as an option to people who currently have one of 300,000 TreasuryDirect accounts. People who have opened those accounts have been able to purchase new U.S. savings bonds as electronic securities, but until now they had no way of converting their existing paper bonds.

The conversions will not affect the redemption values or issue dates for the original bonds, officials said.

Treasury statistics show the government has a long way to go to reach a paperless bond program. Paper U.S. savings bonds currently total $203.5 billion while electronic bonds total just $1.5 billion.

The first people who will have the chance to convert will be TreasuryDirect account holders, who will be getting an e-mail invitation to make the switch.

Officials said other savings bond holders who want to make the switch can apply to open a TreasuryDirect account by visiting www.treasurydirect.gov which is the Web site for setting up one of these accounts.

Approximately 2,500 of these new electronic accounts are being opened weekly, officials at Treasury's Bureau of Public Debt estimated.

With the accounts, bond holders will be able to buy and redeem electronic savings bonds 24 hours a day over the Internet. And starting later this year, Treasury plans to begin offering other Treasury securities such as bills, notes and bonds for sale through the TreasuryDirect accounts.

"Bond owners who take advantage of SmartExchange may have all their savings securities, whether originally bought in paper or electronic form, in a single account that can be accessed at any time, day or night," Zeck said.

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