Currency

Upon receipt of a depository institution's currency deposit, the cash department within each Reserve Bank Office or cash depot will immediately verify the deposit and compare it to the depository institution's notification. The deposit notification, which contains the institution's unique identifier and details of the deposit such as the total dollar amount and breakdown by denomination, can be in either electronic or paper format. When this verification process is complete, the local Reserve Bank will pass credit to the depository institution's Federal Reserve account for the amount of the deposit. The deposit is then placed into vault storage until further processing is conducted by Reserve Bank or depot personnel.

Currency deposits are piece-counted by automated currency processing machines at a Reserve Bank Office or cash depot on a first in-first out basis. Notes are inspected for genuineness and fitness at a rate of approximately 70,000 notes per hour, and notes that are no longer fit for circulation are destroyed by the Federal Reserve. Notes that are destroyed are usually soiled, damaged, torn or have graffiti on them. On average, approximately 20 percent of all currency notes deposited are destroyed because the notes do not meet fitness guidelines for redistribution. Counterfeit currency not previously detected by depository institutions is transferred to the Secret Service (Off-site Link). The depository institution's Federal Reserve account will be debited for the amount of counterfeit currency that was presented to the Reserve Bank Office or cash depot. Notes that are deemed fit for recirculation to depository institutions are packaged and stored in inventory until ordered by depository institutions. When currency is ordered, a debit is passed to the institution's Federal Reserve account for the amount of the order on the day that the currency is released by the Federal Reserve to an armored carrier.

To replace soiled currency notes that are destroyed and also to accommodate the growth of U.S. currency in circulation, the Federal Reserve Banks issue newly printed currency each year. New currency notes are printed by the Bureau of Engraving and Printing (BEP) (Off-site Link) in its Washington, D.C. and Ft. Worth, Texas, manufacturing plants. Each year, the BEP prints over nine billion notes to meet worldwide demand for U.S. currency. New notes are distributed to the 30 Reserve Bank Offices throughout the United States and are issued when inventories of fit notes fall below adequate levels. The Board of Governors mandates that each Federal Reserve Office fill orders with fit notes first in order to minimize the printing costs for new currency. As of November 30, 2000, over $550 billion of U.S. currency is in circulation worldwide - more than four times the amount circulated in 1980. Moreover, approximately two-thirds of that amount is circulating outside the United States.

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