The Cash Lifecycle

You may not know this about the Fed, but we do more than monetary policy.  We also play a central role in the nation’s payment systems. Reserve Banks keep enough currency and coin in circulation to meet public demand, provide check collection services to banks and other depository institutions, operate electronic payment systems, and provide financial services to the U.S. government and certain foreign institutions.  This week, we’re focusing on cash – past and present – and are also highlighting some of the work from our Cash Product Office.

Money, Money, Money

Cash stirs the imagination. It’s a driving plot element and character in thousands of books, movies, television shows, and songs. We think about it, dream about it, talk about it, work for it, save it, and spend it. At its most basic level, cash—currency and coin—is essentially a store of value for obtaining the goods and services you need for your daily life.

The Birth of a Paper Money Economy

Before cash, people would barter or trade with one another for what they needed. This was a time consuming and cumbersome process. However, with the introduction of coins and early forms of paper currency, the concept of purchasing what you needed with cash had a tremendous impact around the world.  This lesson plan will introduce your students to the birth of our paper money economy.

How Has Our History Shaped the Appearance of American Currency?

Money hasn’t always looked like it does today, but has evolved over the last few centuries to become the size and shape that we now carry in our wallets. Our country’s vibrant history—from times of financial crisis and war, to the demand for a stable monetary system— has transformed the appearance of American currency as we know it. Discover this rich history by exploring the SF Fed’s online American Currency Exhibit.

How We Use Cash In Today’s Changing Payments Landscape

As consumer payment choices move increasingly toward electronic payment options, many consumers and economists question the future of paper currency and coin. However, in contrast to the view that cash is in decline, most indicators suggest that cash remains strong and will continue to serve an important role in our economy.

This recently published article discusses the role of cash in a changing payments landscape, describes the impact of recent Federal Reserve policy and operational changes, and explores further innovations that may be needed to ensure that the cash payment system is able to adapt to fluctuating trends in consumer usage.

What Happens to Damaged Currency?

Every day, we use cash to purchase goods and services. But what happens to it once it leaves our wallets?

With more than 5,000 tons of damaged currency shredded by Federal Reserve Banks each year, we are committed to implementing alternatives to landfills and are continually looking for new and innovative ways to reduce our impact on the environment. This includes how we recycle shredded currency, which is the residue left over when worn or damaged currency is destroyed.

In 2013, Federal Reserve Cash offices nationwide recycled 94 percent of the shred using several alternatives to landfills.

In the 12th District, Federal Reserve Cash Services partnered with companies who have re-purposed the shredded currency as roofing tiles, particle board, fuel pellets, stationery, packing material, and artwork. Each district office has been active in finding new solutions. In fact, there’s a Green Team in each office of the 12th District.  Click here to learn how each office handles its shred.

How often do you and your students use cash as a form of payment?

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