Federal Reserve Currency Recirculation Policy
The Board is revising the Federal Reserve's cash services policy to reduce depository institutions' overuse of Federal Reserve Bank currency processing services, which could affect approximately 150 to 225 depository institutions with high-volume currency operations. The Board is adding two elements to the policy: (1) A custodial inventory program that provides an incentive to depository institutions to hold $10 and $20 notes in their vaults to meet customers' demand, and (2) a fee to depository institutions that deposit fit $10 or $20 notes at a Reserve Bank and order the same denomination, above a de minimis amount, during the same business week. In general, the Federal Reserve expects depository institutions to recirculate to their customers fit currency deposited with them and to deposit only excess or unfit currency with Reserve Banks. The Reserve Banks will amend section 3.3 of Operating Circular 2 to implement the provisions of the final policy.