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Fed to Increase Cash Inventory for Year 2000

Thursday, April 1, 1999

Toward the end of the year, the Federal Reserve plans to increase the amount of currency in circulation by about 14 percent over current levels. The increase is in anticipation that some financial institution customers will decide to withdraw greater sums of cash as a result of Year 2000 uncertainty.

Consumers who are concerned that alternative payment methods will not work next Jan. 1 may choose to withdraw more cash than usual for routine household purchases, such as groceries, medicine and gas. But the Fed expects only a small percentage of individuals to significantly increase cash demands toward the end of 1999.

The level of increase in the currency in circulation was determined after the Fed reviewed high currency-demand periods (such as holidays), assessed household spending patterns, and reviewed potential international demand. The currency order does not reflect a Fed recommendation, or even a projection for cash demand in the rollover period. If necessary, the Fed may choose to adjust the increase as it continues to assess the situation throughout the year.

Also throughout 1999, the Fed will work to communicate a positive message to the media and general public concerning the safety of the banking system during the century date change. For additional information about cash inventories, call Jerry McGunnigle at (314) 444-8732.