Paper Money

Federal Reserve FY 2020 order for notes down from FY 2019

An order for 5.2 billion Federal Reserve Notes has been placed for fiscal year Oct. 1, 20019 - Sept. 30, 2020.

Images courtesy of BEP.

The Board of Governors of the Federal Reserve System issued its fiscal year Oct. 1, 2019, to Sept. 30, 2020, print order for Federal Reserve Notes to the Bureau of Engraving and Printing.

The order, placed Aug. 6, is for approximately 5.2 billion Federal Reserve notes, valued at $146.4 billion. For the second year in a row, the order has gotten smaller, a decrease of 1.1 billion notes, or 18 percent, from the final FY2019 order. 

The board’s explanation for the reduced order is that it is primarily a consequence of what it claims is better management, since the currency in circulation, a measure of demand for currency, is increasing year after year. Much of the decrease is because, instead of printing more notes, it is distributing accumulated unissued inventory. It also says that policy and technology changes continue to result in fewer notes being prematurely destroyed.

Finally, the 2020 order does not include any $2 notes. The 2019 order included 153,600,000 $2 notes, which is expected to meet demand for multiple years into the future. 

The board’s announcement explained that its methodology for determining the size of its order considers its estimate of demand for currency from international as well as domestic users. It is based on denomination and includes destruction rates and historical payments to and receipts from circulation.

As usual, the order does not actually increase the money supply. The board says “the primary purpose of the print order is to replace the unfit notes that the Reserve Banks will destroy during normal processing of notes returned from circulation.” 

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