U.S.
BUSINESS > An
Overview of the U.S. Economy > Dollars & Cents: Fundamental
Facts About U.S. Money
Types
of U.S. Paper Money
Currency
in Circulation
More than 99 percent of the total dollar amount
of paper money in circulation in the United
States today is made up of Federal Reserve
notes. The other small part of circulating
currency consists of U.S. notes or legal tender
notes still in circulation but no longer issued.
Federal Reserve notes are printed and issued
in denominations of $1, $2, $5, $10, $20, $50,
and $100. The $500, $1,000, $5,000, and $10,000
denominations have not been printed since 1946.
The Federal Reserve Act requires that adequate
backing be pledged for all Federal Reserve
notes in circulation. U.S. Treasury securities,
acquired through open market operations, are
the most important form of collateral and provide
backing for most of the value of the currency
in circulation. Some other types of collateral
the Federal Reserve holds are gold certificates
and certain eligible instruments such as notes,
drafts, and bills of exchange.
The
Federal Reserve System, established by Congress
in 1913, issues Federal Reserve notes through
its 12 Federal Reserve Districts. Every district
has its main office in a major city, and all
but two have branches in other large cities.
Each district is designated by a number and
the corresponding letter of the alphabet, as
shown at right.
The Bureau of Engraving and Printing, a division
of the U.S. Treasury Department, produces currency
for the Federal Reserve System to replace damaged
or worn notes or to support economic growth.
Federal Reserve Banks issue currency according
to the need in their districts. The district
letter and number on the face of a note identify
the issuing Reserve Bank (see the diagram).
A note with F6 on its face was issued
by the Federal Reserve Bank of Atlanta, for
example.
Types No Longer Issued
Besides the denominations of U.S. notes, from
$1 to $10,000, that were issued before 1929,
several other types of U.S. paper money no
longer issued have circulated in this century.
National Bank notes, for example, were issued
by national banks from 1863 to 1929. Gold certificates,
authorized in 1865 and issued by the Treasury
Department in exchange for gold coin and bullion,
circulated until 1933. Silver certificates,
authorized in 1878 and issued in exchange for
silver dollars, accounted for nearly all of
the $1 notes in circulation until November
1963, when the first $1 Federal Reserve notes
were issued.
