Cash is continuously moving into and out of banks, cash registers, and wallets. The following infographic demonstrates how Reserve Bank cash operations work to meet demand for cash while ensuring the quality and integrity of notes in circulation.
CASH IN MOTION
Federal Reserve Bank Cash Operations at a Glance
How do Federal Reserve notes enter circulation? Why does cash get destroyed? Here are the cash processing basics.
CASH SHIPS INTO LOCAL ECONOMIES
Consumers demand and use a lot of notes.
$20 and $1 notes are the favorite denominations.
A new note becomes legal tender when issued by a Reserve Bank. Which Bank introduced it into circulation? Look for the District letter (A–L) and number (1–12) on the front left side of the note below the serial number. On older series notes, as well as $1 and $2 notes, you’ll find the District letter within a regional Federal Reserve seal.
A new note becomes legal tender when issued by a Reserve Bank. Which Bank introduced it into circulation? Look for the District letter (A–L) and number (1–12) on the front left side of the note below the serial number. On older series notes, as well as $1 and $2 notes, you’ll find the District letter within a regional Federal Reserve seal.
CASH COMES TO A RESERVE BANK
When financial institutions have more currency on hand than needed, they make deposits with Federal Reserve Banks.
The majority of notes are $1 and $20.
HIGH-SPEED EQUIPMENT PROCESSES NOTES
Reserve Bank cash operations use high-speed processing equipment to determine which notes are fit to re-enter circulation.
All currency that comes into a Reserve Bank must be processed within a maximum of 60 days, but we get to it much faster.
Which notes jump to the head of the line? Higher-value denominations are processed within a few days. All notes are processed within two months.
Fit notes can still be used for commerce. Worn or torn notes are destroyed.
By recirculating fit notes, the Reserve Banks reduce expenses associated with printing new notes.
NEW NOTES ENTER THE MIX
Annual Print Order
Destroyed Notes
Growth in Cash Demand
Annual Print Order = Destroyed Notes + Growth in Cash Demand
Every year the Federal Reserve Board of Governors places an order with the Bureau of Engraving and Printing (BEP), which is responsible for printing new notes. The Board’s annual print order is based on the number of notes taken out of circulation by Reserve Banks and growth in cash demand.
90%
of the Fed’s annual print order for new notes replaces worn or torn notes historical average