Post on 16-Feb-2016
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US $100 Banknote Creasing:History and Resolution
Federal Reserve Efficiency Efforts, Uncertainty, andIssuing the New-Design $100 Federal Reserve Note
Michael LambertAssociate Director
The Board of Governors of the Federal Reserve System
Agenda
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•The Federal Reserve’s role in the cash cycle•Efforts to improve efficiency •Demand conditions and planning for uncertainty•Preparing to issue the new-design $100•New $100 Note Issued
The Federal Reserve’s Role in the Cash Cycle
3
•Board as Issuing Authority; Reserve Banks distribution and processing roles
•Ensure notes are authentic and “fit for commerce”•Encourages recirculation of fit notes by commercial banks
•Provides a machine calibration testing program and publishes fitness guidelines
4
Growth Remains Strong
Dec-99
Dec-05
Dec-11
Dec-17
Dec-23
Dec-29
Dec-35
Dec-41
Dec-47
Dec-53
Dec-59
Dec-65
Dec-71
Dec-77
Dec-83
Dec-89
Dec-95
Dec-01
Dec-07
0
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
35,000,000,000
Billions of Notes in Circulation by Denomination
$50s-$100s
$10s-$20s
$1s-$5s
5
Processing Needs to be Flexible
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000Federal Reserve Cash Processing VolumesBillions of Notes
Receipts+0.7% YTD 2013
Recirculation Policy Implemented
6
Effects of Recirculation Policy•Decreased number of times $10 and $20 notes return to the Reserve Banks
Inventory Turn RateTimes processed per year
1s 2s 5s 10s 20s 50s 100s Total2000 1.3 0.0 1.3 1.6 2.8 1.1 0.4 1.52001 1.6 0.0 1.3 1.5 2.8 1.0 0.4 1.52002 1.5 0.0 1.3 1.5 2.9 1.0 0.4 1.52003 1.5 0.0 1.3 1.4 2.8 1.0 0.4 1.52004 1.5 0.0 1.3 1.5 2.9 1.1 0.4 1.52005 1.5 0.0 1.3 1.4 2.7 1.0 0.4 1.42006 1.5 0.0 1.3 1.4 2.6 1.0 0.4 1.42007 1.4 0.0 1.3 1.2 2.3 1.0 0.4 1.32008 1.4 0.0 1.3 1.1 2.0 1.0 0.4 1.22009 1.3 0.0 1.2 1.1 1.8 0.8 0.3 1.12010 1.3 0.0 1.2 1.0 1.8 0.8 0.3 1.12011 1.2 0.0 1.2 1.0 1.7 0.8 0.3 1.02012 1.1 0.0 1.2 0.9 1.6 0.8 0.3 1.0
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Upgraded High Speed Processing Machines and Sensors
•Upgraded machines increased efficiency almost 50 percent–BPH from low 70s to high 90s (from less than 20 notes per second to about 30 notes per second).
–Staff (as measured by ANP) decreased from 1500 to 1350
•Increased fitness sorting and authentication capabilities reduced shred rates and increased note life.
–Shred rates for $1 notes decreased from 50 to 15 percent–Note life increased from 1.4 to 5.9 years
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Recirculation and Upgrade Efficiencies
9
Sensor Upgrades and Policy Change Effects on $1 Notes
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0
1
2
3
4
5
6
7
0
10
20
30
40
50
60
Note life $1 destruction rate
Not
e lif
e (y
ears
)D
estruction rate (percent)
New opticalsorting sensor
Conditioning of misfaced notes
Misfaced notes policy
10
The Path Forward
$100 Note Demand is Strong
11
•We needed to plan for strong demand when preparing to issue the new-design note
–About 9 billion $100 notes in circulation–Planned to replace half in first year after issue
•Needed to build inventories of new-design while maintaining inventories of old-design
–Significant strain on vault capacity–Careful management of shred policy of old-design notes
12
$100 Notes in Circulation(billions of notes)
0
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
2,614,129,654.0
7,045,969,498.0
8,892,073,583.0
*2013 data are through June
$100 Note Inventory and Payments(12-month rolling average, millions of pieces)
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0
400,000
800,000
1,200,000
1,600,000
2,000,000
0
100,000
200,000
300,000
400,000
Fit Inventory New Inventory Payments to Circulation (Right Axis)
Financial Crisis
$100 Note Inventory By Design Type(millions of pieces)
14
0200,000400,000600,000800,000
1,000,0001,200,0001,400,0001,600,0001,800,000
Current-Design New-Design
Low Risk of Insufficient Inventory
0.0
500,000.0
1,000,000.0
1,500,000.0
2,000,000.0
2,500,000.0
3,000,000.0
3,500,000.0
4,000,000.0 Sensitivity AnalysisReserve Bank Ending Inventories of NXG $100 Notes
20% Increase 30% Increase 40% Increase
RB
End
ing
Inve
ntor
y (b
illio
ns o
f not
es)
40 days payable
Sensitivity analysis is based on average monthly $100 note payments to circulation during 2012 15
Release Date: April 24, 2013
For immediate releaseThe Federal Reserve Board on Wednesday announced that the redesigned $100 note will begin circulating on October 8, 2013. This note, which incorporates new security features such as a blue, 3-D security ribbon, will be easier for the public to authenticate but more difficult for counterfeiters to replicate.
The new design for the $100 note was unveiled in 2010, but its introduction was postponed following an unexpected production delay. To ensure a smooth transition to the redesigned note when it begins circulating in October, the U.S. Currency Education Program is reaching out to businesses and consumers around the world to raise awareness about the new design and inform them about how to use its security features. More information about the new design $100 note, as well as training and educational materials, can be found at www.newmoney.gov. 16
Goal: To protect and maintain confidence in Federal Reserve notes
Overall Program Objectives:Educate users of U.S. currency about:• The appearance of genuine Federal Reserve
notes• The security features in genuine banknotes• How to use security features to differentiate
between genuine and counterfeit banknotes
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Global Currency Education
Highlights of the $100 Note Program • More than 30 international and domestic training
seminars in locales ranging from Angola to Vietnam; • 25 international and domestic media events on or
around the October 8 issue date hosted by U.S. embassies internationally and Federal Reserve Banks domestically; and
• An email outreach program to more than 170,000 U.S. cash handlers and law enforcement stakeholders with information about how to prepare for the introduction of the redesigned $100 note.
• 10 different educational materials in 25 languages.18
How We Educate
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Global Audience
Events
Website
Training
Media Outreach
Integration
Fulfillment
Conferences
Direct Outreach
Social Media
Resources for Financial Institutions
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www.newmoney.gov
Now Circulating!