$931.4 million.
That's how much the Federal Reserve will spend to print
bills in 2023.
But there's a problem with us cash.
We haven't modernized or changed our currency.
That's probably a mistake.
For example.
We should have dollar coins instead of paper notes.
Physical currency has changed around the world,
but not in the US.
The Nordic countries we see a move away from cash into
digital. India had a government sponsored program
to eliminate small denominations of cash.
The rest of the world has moved towards polymer notes,
which are a form of plastic .
Lasts something like four times as long as the old
paper notes.
Meanwhile, an increasing number of Americans are
ditching cash for electronic payments.
The Pew Research Center found 41% of Americans in
2022 didn't use cash in a given week.
That number rose from 29% in 2018.
Still, cash demand is growing, and experts say
it's not going away.
There's actually more cash in circulation today than
ever.
Cash production has been growing year by year, by one
and a half to 2% for at least a decade.
The US government is very much engaged in electronic
commerce, in addition to being the entity that prints
cash.
In terms of electronic transactions replacing cash,
no, cash always has an important and valuable spot.
So what's wrong with us?
Cash? And how can we fix it?
The $1 bill was the most popular currency in the US
for years. But in 2017, for the first time in history,
the $100 bill surpassed the one.
And today, 18.5 billion $100 notes are in
circulation. $1 bills are the second most circulated
at 14.3 billion notes, and $2 bills are circulated the
least at 1.5 billion.
The $100 comes from US currency being a global
currency, and a lot of those hundreds are outside
the country and they're being used for store of
value.
Some speculate that the rise in $100 bills in circulation
may also be to avoid taxes or for illegal activity,
since cash can be traded anonymously.
I think the other argument is somebody involved in
illegal activity will find a way to get around not
having $100 bills.
Credit cards or electronic payments of any type.
There's a way to track them.
But I do understand wanting to be fully anonymous as you
go about your day, and cash does provide that.
They don't want their wife to know they spent $200 on a
coin for collectors, for example.
And in the past, accessibility has determined
what currency Americans choose.
The $2 bill has lost its place in everyday usage.
It was left out of the vending machine market.
Denominations like the $2 bill or the half dollar
coin. Because there was no space made in the actual
cash registers, they became less popular.
In the 1960s, the half dollar lost its place
because it wasn't included in the use of parking
meters.
The Federal Reserve has also ended production of currency
before and tried to change different denominations.
America used to make things called half cents.
The penny wasn't always the lowest denomination of coin
.
Bills over $100, like the 500, 1000, and 5000, were
discontinued in 1969 because they were rarely
spent, and at that time, checks and credit card
payments were on the rise.
In the late 1960s, the Bureau of Engraving and
Printing called the Treasury and the Treasury
called the Federal Reserve, saying, if we're going to
print these bills again, we have to make new plates.
There was a debate going on at the highest levels, and
they thought, nobody's going to use cash in ten
years.
And 6 in 10 Americans say convenience is key to
spending.
The US Treasury oversees both the Bureau of Engraving
and Printing, responsible for paper notes, and the US
mint, where coins are made.
The 2023 budget to produce paper bills is $931.4
million. About 28% of that goes to paper, ink, and
labor, while 63% goes to manufacturing overhead,
general support, research and engraving.
The fed says US bills are made to last with a 25%
linen, 75% cotton blend and that it takes 4000 double
folds before a banknote will tear.
But many countries have moved their lower currency
denominations to coins to help with longevity.
A metal dollar will last about 30 years in
circulation. How many of us have gone to a vending
machine and tried to use a dollar bill, and had to feed
it in 5 or 6 times?
You don't need to do that with a coin.
The rest of the world makes coins, usually for 1 to $2.
It's hard to find a paper note below five American
dollars in most developed countries.
Japan's ¥500 coin is equivalent to about 3.5 USD,
and Australia and Europe use 1 in 2 coins in place of
notes. But the US has tried switching to coins before.
In the 1920s, the Treasury reintroduced the $1 silver
dollar and the $2 bill because it will save money.
$1 coins last a long time.
$2 bills.
You only have to print half as many as the ones.
It didn't go over at all.
Then they tried it in the 1960s under the Kennedy
administration, people didn't want $1 coins and
twos except to save as a souvenir.
People have thought about reviving the 500 and cut the
production by five.
Save money. Nobody's going for it.
The fed also says transitioning to coins is
inefficient and costly.
The argument for the $1 coin, it was cheaper over
the long run, but over time there were upgrades, various
additives and varnishes.
So now the $1 bill, I think has a life close to six
years.
Then why has every other country done it?
Why has Canada done it?
Why hass England done it?
Why has all of Europe done it?
Why has Japan done it?
Australia, the UK and other countries have also moved
from paper to polymer notes.
Since 1988, when Australia issued the first polymer
notes. They've become very popular across the world.
For not going to polymer, a linen cotton note has a
certain feel to it, and since this is a global
currency, someone inside or outside the US may not
realize if this is a counterfeit or not.
Some experts claim that the Fed's choice to print paper
notes is a waste of money fueled by special interests.
Vendors hire lobbyists to make sure that the mint buys
the same type of alloy for their coins.
Or in the case of paper, it's a major part of their
production. If they lose that production, they lose
jobs as an organization, they lose power.
There are billions of dollars to be saved from
going from paper dollar notes, which I might add are
printed using toxic ink for anti counterfeiting.
So there's an environmental impact.
Why is there a pushback in the United States to moving
towards dollar coins, the Federal Reserve.
The world that we're in and the world that we're headed
to, we're certainly not spending time thinking are
coins better. I just saw a statistic that said over 40%
of people said they had not used cash at all in the past
week. In fact, I couldn't tell you if I had any in my
wallet right now.
Modernizing cash is not easy.
Banknotes are extremely complex instruments.
And then there's buried deep inside the note various
tags.
And innovation is changing the way we use cash.
Those technological advances are what's really going to
influence people's lives for the better.
Making cash something that can carry value
electronically. Connecting notes to the blockchain.
Many businesses support electronic and cash options,
plus innovative ways to bridge the gap.
If you still transact in cash but you need to buy or
want to buy something online, get a QR code.
There's a variety of stores that will do this.
Scan the QR code, pay in cash, and they release your
merchandise.
Your electric bill comes.
You can go to a Walgreens and pay that bill with cash.
And cash is cheaper.
I got my hair cut today, $22, but they had a 4%
surcharge if I used a card.
There are a lot of people that use cash because they
don't want to spend money they don't have.
New York City and Philadelphia are even
requiring businesses to accept cash.
Legislation being passed that cash must be available
and that you cannot have a purely cashless store.
However, with the exception of changes to state law, the
fed says businesses are free to determine what
method of payment to accept.
To access digital mechanisms would need to be ubiquitous,
either through a smartphone or through an internet
connection. Not quite there yet.
Give the American people options.
Cash - it's been around for a long time because it does
its job really well.