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Budgets: Chapter 4. Currency Budget

Federal Reserve Banks issue new and fit currency to the public through depository institutions and destroy currency already in circulation as it becomes unfit or when a new design is issued. Each year, under authority delegated by the Board, the director of the Division of Reserve Bank Operations and Payment Systems orders new currency from the U.S. Department of the Treasury's Bureau of Engraving and Printing (BEP). Upon reviewing the order, the BEP establishes billing rates for new currency, which the Board staff uses to prepare the annual budget for new currency. Once the Board approves the new currency budget, it assesses the costs of new currency to each Federal Reserve Bank through an accounting procedure similar to that used in assessing the costs of the Board's operating expenses to the Banks. Total new currency expenses for 2008 were under budget by $102.0 million, or 16.9 percent, primarily because the BEP produced 899 million (10.8 percent) fewer notes than budgeted.

The approved 2009 new currency budget of $631.5 million is 26.2 percent higher than 2008 costs (chart 4.1). Printing costs for Federal Reserve notes represent 96 percent of the new currency budget, and expenses for currency transportation, counterfeit-deterrence research, and the Treasury's Office of Compliance account for the remaining 4 percent (table 4.1).

Chart 4.1

Federal Reserve Costs for New Currency, 1997-2009

Chart 4.1 - Federal Reserve Costs for New Currency, 1997-2009

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Table 4.1 Federal Reserve Budget for New Currency, 2008 and 2009
Thousands of dollars, except as noted
Item 2008 (actual) 2009 (budgeted) Percent Change
Printing of new Federal Reserve Notes 477,870 606,070 26.8
Currency transportation 15,034 17,145 14.0
Counterfeit-deterrence research 3,686 4,240 15.0
Reimbursement to the U.S. Treasury's Office of Compliance 3,812 4,022 5.5
Total cost of currency 500,402 631,477 26.2

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Printing of Federal Reserve Notes

The calendar-year 2009 currency order will cost $606.1 million to print, a 26.8 percent increase from the cost for the 2008 order. The average billing rate increased 24 percent, from $69.66 in 2008 to $86.36 in 2009 (table 4.2); this increase is influenced strongly by the estimated cost for the Series 2004 $100 note, which accounts for about 19 percent of the 2009 order, and changes in both print-order volume and denomination mix. In particular, we estimate that the incremental cost to produce the more-expensive Series 2004 $100 notes accounts for 50 percent of the billing rate increase and that BEP fixed costs spread over the smaller print order will account for an additional 33 percent. Excluding these factors, the average billing rate would have increased only 4 percent, to $72.48 per thousand notes. In addition to the increase in billing, the 2009 print budget is also higher than 2008 costs because it contains a larger share of more-expensive Series 2004 notes than did the 2008 budget. Series 2004 notes account for 49 percent of the calendar-year 2009 budget, compared with 46 percent of the 2008 calendar-year budget (table 4.2). Specifically, the proposed 2009 budget includes 1.3 billion Series 2004 $100 notes at the billing rate of $134.97 per thousand, amounting to $178.4 million, or 29.4 percent, of the total proposed printing costs for the new currency budget.

Table 4.2 Projected Federal Reserve Costs of Printing New Notes, by Type of Note, 2009
Type of note Number of notes (millions) Percent of total notes Cost per thousand notes (dollars) Total cost (thousands of dollars)
Unthreaded ($1, $2) 2,745.6 39.1 52.68 144,638
Series 1996 ($100) 851.2 12.1 97.23 82,762
Series 2004        
$5 780.8 11.1 90.08 70,334
$10 140.8 2.0 93.50 13,165
$20, $50 1,177.6 16.8 99.18 116,794
$100e 1,321.6 18.8 134.97 178,376
Volume-weighted average cost 86.36
Total 7,017.6 100.0 606,070

Note: Components may not sum to totals and may not yield percentages because of rounding.

e Estimate. Return to table

… Not applicable. Return to table

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Currency Transportation

The 2009 currency transportation budget is 17.1 million, which includes the costs of shipping new currency from the BEP to Reserve Banks ($10.2 million), of intra-System shipments of fit and unprocessed currency ($6.9 million), and of returning currency pallets to the BEP ($55,000).

The 2009 budget for currency transportation increased 14 percent from 2008 costs. The overall increase reflects only a slight change in intra-System shipment costs, but a 29.5 percent increase in new currency shipment costs. Intra-System shipment carriers adjusted costs throughout 2008 to reflect fuel price changes. For budget planning purposes, therefore, we assumed no significant price changes in 2009 for Intra-System shipments. The new currency shipment budget, however, increased 29.5 percent over 2008 expenses, primarily because we assumed significant price increases for carriers that did not seek fuel surcharge relief in 2008.

Counterfeit-Deterrence Research

The 2009 budget for counterfeit-deterrence research is $4.2 million, which includes costs associated with the Central Bank Counterfeit Deterrence Group (CBCDG) and the Reprographic Research Center (RRC). The CBCDG operates under the auspices of the G-10 central bank governors to combat digital counterfeiting and includes 30 central banks. The Board's $4.2 million share of the 2009 CBCDG budget, which accounts for 99 percent of the Federal Reserve's counterfeit-deterrence budget, is 15.2 percent higher than the Board's share of the 2008 CBCDG costs.1 Most of this increase is attributable to new research initiatives and legal fees.

Reimbursement to the Treasury's Office of Compliance

The 2009 budget to reimburse expenses to the Treasury's Office of Compliance (OC) is $4.0 million. The OC develops Reserve Bank standards for cancellation and destruction of unfit currency and for note accountability; the OC also reviews Reserve Banks' cash operations for compliance with its standards. As a public service, the OC also processes claims for the redemption of damaged or mutilated currency. The OC budget increase of 5.5 percent results primarily from increased travel costs.


  1. The estimated RRC payment of $35,000 represents the remaining 1 percent of the counterfeit-deterrence research budget. The RRC is a state-of-the-art facility hosted by the National Bank of Denmark to conduct adversarial testing of banknote designs and counterfeit-deterrent features for its 13 member countries. Return to text

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