Financial Update (October-December 1999)
Ensuring There's Enough Cash in the Vault to Meet Demand
oes $67 billion sound like a lot of money? That's the amount of currency more than nine billion notes the Federal Reserve has ordered for the year 2000 from the Treasury Department's Bureau of Engraving and Printing. But this order is actually smaller than the one for 1999.
Last year the Federal Reserve ordered 11 billion notes totaling $267 billion in face value from the Bureau of Engraving and Printing. This amount was considered necessary for normal business transactions and to prepare for the possibility of increased currency demand during the century date change. Although all payment options are expected to work during the rollover, the Fed increased its currency inventory for 1999 because it wants the public to have confidence in the availability of cash.
"Because of increasing confidence in the readiness of the financial infrastructure, we do not anticipate extraordinary demand for cash," said Federal Reserve Governor Edward W. Kelley Jr. "Nevertheless, we have taken all the appropriate steps to make sure (cash) is available if the public wants it."
The currency order for 2000 represents a return to more normal ordering patterns. It is also smaller than the order for 1999 because the Federal Reserve decided not to print additional $50 and $100 notes in 2000. The Fed estimates that the inventory of larger notes is sufficient to meet any anticipated demand over the next federal fiscal year, which begins Oct. 1.
Though currency inventory levels depend on flows into and out of Reserve Banks from the nation's depository institutions and on the destruction rate of worn-out bills, by year-end the Fed expects to have well over $200 billion in Reserve Bank vaults. That's more than the approximately $170 billion in currency now circulating in the United States.
The Federal Reserve expects inventory levels to decrease gradually next year as replacement currency enters circulation and the Bureau of Engraving and Printing delivers fewer notes.