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 (PDF). 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 the Reserve Bank.

Currency deposits are piece-counted by automated currency processing machines at a Reserve Bank Office on a first in-first out basis. Notes are inspected for authenticity and fitness at a rate of approximately 100,000 notes per hour, and notes that are no longer fit for circulation are destroyed by the Federal Reserve. On average, approximately 15 percent of all currency notes deposited are destroyed because the notes do not meet fitness guidelines (PDF). Unfit notes usually consist of soiled, defaced, or torn notes.

Counterfeit currency not previously detected by depository institutions is transferred to the U.S. 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. Notes that are deemed fit for recirculation 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 destroyed notes and to accommodate the growth of U.S. currency in circulation, the Federal Reserve Banks issue newly printed currency each year. The U.S. Bureau of Engraving and Printing (BEP) (Off-site Link) prints new currency in its Washington, D.C. and Ft. Worth, Texas, manufacturing plants. Since 2010, the BEP prints on average seven billion notes annually to meet worldwide demand for U.S. currency. New notes are distributed to the 28 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 September 2015, nearly $1.34 trillion in U.S. currency is in circulation worldwide. Moreover, approximately two-thirds of that amount is circulating outside the United States.

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