Bill seeks removal of $1 Federal Reserve notes
- Published: Nov 16, 2013, 7 PM
Legislation authorizing the removal of Anthony dollars from circulation, improvements to the circulation of other $1 coins and eventually replacing the $1 Federal Reserve note with a $1 coin is pending congressional approval.
H.R. 3305, the Currency Optimization, Innovation, and National Savings Act, was introduced Oct. 22 by Rep. Mike Fitzpatrick, R-Pa.
The focus of the bill is to “improve circulation of $1 coins and remove barriers to circulation and save taxpayer dollars,” according to the legislation.
The legislation stipulates that within six months of the enactment of the bill into law, the Board of Governors of the Federal Reserve System would be required to “sequester” all Anthony dollars and not return them to circulation.
The only exceptions would be the release at face value in bulk quantities to coin dealers and foreign countries that have adopted the U.S. dollar as their base unit of exchange.
One year after the bill is approved by Congress and signed into law by the president, the Treasury secretary would be required to declare all Anthony dollars obsolete. The act would also require that the Anthony dollars be “treated in the same manner as all other obsolete United States coins.” A spokesman in Fitzpatrick’s office said those Anthony dollars, while considered “obsolete,” would not be demonetized. Anthony dollars in circulation would remain legal tender.
The Federal Reserve would be required to issue quarterly reports to Congress about the number of Anthony dollars in its vaults, the number remaining in circulation and about efforts to reduce the number to zero.
The Anthony dollars were issued in 1979 to 1981 and again in 1999.
New dollar coins were issued in 2000 with an obverse portrait of Sacagawea, the 15-year-old Shoshone Indian guide who, with her child, Jean Baptiste, on her back, guided the Meriwether Lewis and William Clark expedition to the Pacific Ocean.
The common reverse design on Sacagawea dollar coins struck in 2000 to 2008 was a soaring American eagle.
In 2009 Sacagawea dollars were introduced with a Native American reverse design. The coins continued to use the Sacagawea portrait on the obverse, though some obverse legends were moved to the edge.
All circulation-quality Sacagawea dollars struck since 2002 have been produced for collector sales. The Federal Reserve has not ordered any of the coins since 2001 for distribution into circulation.
The Presidential dollar program began in 2007. After high mintages during its first year of production, the number of coins struck rapidly fell in 2008, with little demand seen for the coins. In December 2011, Treasury Secretary Timothy F. Geithner suspended production of Presidential dollars for circulation. At that time 1.4 billion Presidential dollars were in Federal Reserve vaults, an amount that Treasury and Federal Reserve officials said would satisfy demand for the next 10 to 12 years.
The Presidential Dollar Coin Act of 2005 mandates the production of Presidential dollars from 2007 to 2016. The Native American $1 Coin Act of 2008 requires that 20 percent of all dollar coin production be Native American dollars.
Coins from both programs remain available to collectors through the U.S. Mint at collector premiums.
The legislation would require the Federal Reserve to improve the circulation and remove barriers to circulation of $1 coins. The legislation states quarterly reports would be provided to Congress by the Federal Reserve’s Board of Governors stating:
? What efforts to improve circulation have been implemented and what efforts are being planned.
? The success of those efforts, including an analysis of the dollar coins in storage and in circulation.
? Any barriers to circulation of the dollar coins, including the availability of quantities of the dollar coins “unmixed with” Anthony dollars.
? The extent to which the Federal Reserve is “unable to meet end-user requests for unmixed quantities” of dollar coins including rolls, disposable tubes or volume bags.
The legislation also calls for the Federal Reserve and the Department of State and the U.S. Treasury Department to work together “to ensure that countries that have adopted the dollar as a base unit of exchange and which place orders with the Federal Reserve System, or through any United States financial institution, for supplies of $1 monetary units,” would be told before placing orders about the durability and longevity of $1 coins for use in daily commerce.
Panama and Ecuador are two examples of nations that currently use the U.S. dollar as an official legal tender. Another major non-domestic user of U.S. currency are U.S. military bases abroad, according to Fitzpatrick’s spokesman.
The legislation mandates that once the $1 coins in circulation “achieve sufficient market penetration such that consumers and retailers are comfortable using $1 coins and are able to obtain adequate supplies of $1 coins, $1 coins should replace $1 Federal Reserve notes as the only $1 monetary unit issued and circulated by the Federal Reserve System.”
Federal Reserve Banks could continue to place $1 FRNs into circulation until “the date on which the number of $1 coins placed into circulation after the date of the enactment of this Act exceeds 600,000,000 annually; or the date that is four years after the date of enactment of this Act.”
Under the legislation, once the appropriate date is reached, the Federal Reserve would be prohibited from ordering additional $1 FRNs for circulation, although the Fed could, “for a period of one year, continue to place into circulation $1 Federal Reserve notes on hand or those deposited” except those unfit for circulation.
A provision in the legislation would allow the Federal Reserve Board of Governors to approve production of $1 FRNs “as the board determines from time to time are appropriate solely to meet the needs of collectors of that denomination. Such notes shall be issued by one or more Federal Reserve banks.”
The legislation has been referred to the House Committee on Financial Services. ¦