Money Matters

In order to discourage counterfeiters and criminals from attempting to copy and use fake U.S. currency, American money incorporates several security features. Visual Capitalist, an online publisher that focuses on markets, technology, energy and the global economy, recently highlighted the security features that make up the $100 bill. Key Security Features There are six features on the $100 bill that help prevent counterfeiting and help protect our currency: Serial Numbers – Every U.S. $100 bill has a unique serial number that records its production data and helps keep track of how many bills are in circulation. There is also a EURion constellation on the $100 bill, a group of yellow rings that can be found near the serial number, that is only detectable by imaging software. Color-Changing Ink – Color-changing ink on the $100 changes color when looked at from different angles. This is accomplished by small metallic flakes that are part of the ink itself. All U.S. bills have a color-changing inked denomination in the lower right-hand corner. The $100 also has a color-changing Liberty Bell image on the currency. Micro Printing – Micro printed images placed on the $100 cannot be scanned or copied by printers, and cannot be seen by the naked eye. The $100 bill has the phrase “USA 100” micro printed in several places on the bill. Magnetic Ink – Magnetic ink, known as Intaglio Printing is used on each bill rather than using regular ink that is pressed onto paper. According to the Bureau of Engraving and Printing (BEP), “ink is applied to the engraved plate.  The excess ink is removed from the non-image area of the plate, thereby leaving ink only in the engraved recessed areas.  Paper is then laid on top of the plate, and the two are pressed together under great pressure.  As a result, the ink from the recessed areas is pulled onto the paper, creating a slightly raised finished image.  When dried, the tactility feels like fine sandpaper.” Threads, Ribbons, and Watermarks – A clear, embedded security thread is vertically run through each bill. This thread can only be seen under UV light and contains microprinting that identifies the bill’s value. On $100 bills there is also a 3D ribbon that is placed in the center of the bill. The ribbon contains a pattern that alters slightly as it is moved. Watermarks are included on all bills over $5 and can be seen when light passes through the bill. Fiber Paper – American money is made up of 75% cotton and 25% linen and contains red and blue fibers throughout the bill to make counterfeiting more difficult.  While the amount of counterfeit bills in circulation is small, the BEP is always trying to improve the security of the U.S. currency and stay ahead of would-be criminals.

Most of us have some denomination of greenbacks stashed somewhere. Whether in our wallet or in a shoebox under our beds, U.S. paper money has a long history.  Paper Currency According to the U.S. Currency Education Program, paper currency was established in the United States in 1690. The Massachusetts Bay Colony used paper money to fund military expeditions. Other U.S. colonies followed suit soon after. The Revolution In 1766, Continental Currency denominations featured illustrations that were inspired by the colonial fight against Great Britain during the American Revolution. According to the U.S. Currency Education Program, these “illustrations signify the colonies’ values and virtues.” By 1775, the Continental Congress had issued paper currency in an effort to finance the Revolutionary War. Unfortunately, the value of the Continental Currency quickly lost value because of a lack of concrete backing.  The first $2 Continental note was issued on June 25, 1776 – nine days before the July 4th Declaration of Independence. Bank of the United States Yes, Lin Manuel Miranda’s hit musical Hamilton is actually based on a real person. In 1791, Alexander Hamilton established the Bank of the United States, which created a credit system for the government. Hamilton is credited with having an insight when creating the Bank of the United States that has led our financial system for almost 250 years. While our paper currency has changed significantly over the years, its purpose has remained largely the same – to allow for an equalized ability to purchase the goods and services that we need to get through our daily lives.

Natural disasters are becoming more prominent around the United States – and the world. Climate change is causing hotter and more destructive fires in the West, hurricanes and floods in the South, and everything in between. These terrible disasters can affect every part of a person’s life. Amidst the aftermath of cleaning up from natural disasters, people often wonder what can they do with cash money that has been destroyed during the natural disaster?  For this, at least, there is a silver lining. Bureau of Engraving & Printing The U.S. Department of Treasury has a subsidiary called the Bureau of Engraving and Printing (BEP). The BEP’s function is to print U.S. paper currency, which it does to the tune of billions of dollars each year.  As part of the services rendered by the BEP, they offer free redemption for individuals and businesses who are in possession of mutilated currency notes. The BEP’s Mutilated Currency Division receives over 22,000 requests per year to examine mutilated currency for possible redemption. These mutilated banknotes have an estimated value of over $35 million dollars. According to the BEP, “Mutilated currency is currency which has been damaged to the extent that one-half or less of the original note remains, or its condition is such that its value is questionable.  Currency notes can become mutilated in any number of ways.  The most common causes are fire, water, chemicals, and explosives; animal, insect, or rodent damage; and petrification or deterioration by burying.” Getting Your Money Back The BEP will replace mutilated currency to lawful owners when: Clearly more than 50% of a note identifiable as United States currency is present, along with sufficient remnants of any relevant security feature; or 50% or less of a note identifiable as United States currency is present and the method of mutilation and supporting evidence demonstrate to the satisfaction of the BEP that the missing portions have been totally destroyed. This is a welcome relief to thousands of people living in the U.S. who have withstood fires, hurricanes, storms, and earthquakes.

There are three active mints within the United States (San Francisco, Denver, and Philadelphia). Each of these mints are responsible for the creation of coins that are in circulation within the U.S. Not as well known is the fact that during World War II (WWII) the three U.S. mints also created coins for 26 countries across the globe.  According to a 1945 press release from the U.S. Mint, “Secretary Morgenthau today revealed for the first time in detail the wartime contribution of the United States to monetary systems of more than a score of friendly nations, a tremendous manufacturing job piled on top of record-breaking domestic coinage, and met despite acute manpower and equipment shortages.” You Can Bank On It During 1944 alone, the then Director of the Mint, Nellie Tayloe Ross, reported to Secretary Morgenthau that the three minting facilities in the U.S. had minted nearly 800 million coins for “friendly” countries. This, in excess of the three billion coins minted for domestic use. List of Countries The 1945 press release also stated, that “The United States has executed coinage orders for foreign Governments since authorized by Congress in 1874, but it has been during the last five years that this business has reached large proportions. The minting of pesos, centavos, florins, riyals, francs, and many other foreign coins of various alloys, all of which must conform to the coinage laws of their respective countries, has become every-day business to the skilled artisans of the Mint. A list of countries for which the United States has made coins during the past five years, as a part of a Good Neighbor policy, reads like a lesson in geography. Included are Australia, Belgian Congo, Belgium, Bolivia, Cuba, Curacao, Dominican Republic, Ecuador, El Salvador, Ethiopia, Fiji Islands, France, Greenland, Guatemala, Indo-China, Liberia, Netherlands and her island possessions, Nicaragua, Peru, Philippine Islands, Saudi Arabia, and Surinam.” All coins created for foreign countries during this time were minted at cost, with materials either supplied or purchased by the countries themselves. Silver for coins, on the other hand, was furnished on a lending basis to be paid back after the war. This cooperation was vital to the global war effort to help keep foreign countries from collapsing from a lack of currency to be released in circulation.

When people think about cash currency in the United States they most often think of the most popular denominations: $1, $5, $10, $20, and maybe, wistfully, $100. Hardly anyone these days thinks of or remembers the $2 bill. Most people think $2 bills are a thing of the past and that they are no longer in circulation. Those assumptions are wrong. The $2 Bill According to a CNN Business article, “The Treasury Department’s Bureau of Engraving and Printing (BEP) will print up to 204 million $2 bills this year, based on an annual order from the Federal Reserve System. There were 1.4 billion $2 bills in circulation in 2020, according to the latest data from the Federal Reserve.” That being said, the $2 bill accounts for a mere drop in the bucket of the $2 trillion worth of currency in circulation in the U.S – only 0.001%. Misunderstandings It’s unfortunate that Americans largely misunderstand the $2 bill as it is very handy to have when making small denomination purchases. And while the BEP doesn’t need to request the printing of new $2 bills each year, it still is in active circulation. The bills just tend to last longer because they are used less often. Steadfast Supporters There are, however, $2 loyalists. According to the Wall Street Journal, U.S. Air Force pilots who fly U-2 spy planes keep a $2 in their flight suit. Additionally, supporters point to the fact that it costs about half the funds for the BEP to print a $2 than a higher denomination. This is largely due to costlier security features that are printed on higher denominations. Also, the Treasury Department can print twice as many $2 bills than $1 bills representing the same value.  With all of those sound reasons why $2 bills are more efficient and, frankly, fun to use, let’s hope that a trend takes off to start using the $2 more regularly.  Here’s to the $2s!

While credit card companies are pushing for a move to a cashless society, that situation is clearly not taking hold in many parts of the world. While there has been a rise in cashless payments, especially since the global COVID-19 pandemic, cash is still heavily relied upon the world over.  Merchant Machine, a comparison website for United Kingdom (UK) customers, recently released its 2022 findings for which countries around the world are most reliant on cash. Methodology To conduct the study, Merchant Machine analyzed metrics for each country including the percentage of internet users, percentage of people who have a credit card, the number of ATMs available per 100,000 people, the percentage of cash-based payments made, and the percentage of the population that was unbanked – meaning they don’t have a bank account. Results According to the study, the top 10 countries that most rely on cash payments are: [/et_pb_text][et_pb_image src=”https://www.goldstaratm.com/wp-content/uploads/Countries-that-use-cash.png” title_text=”Countries that use cash” align=”center” _builder_version=”4.18.0″ _module_preset=”default” width=”49%” max_width=”49%” global_colors_info=”{}”][/et_pb_image][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”] According to the study, “Morocco is leading the way when it comes to cash payments in 2022. 74% of all payments in Morocco are cash-based, with 71% of the population not having their own bank account and only 0.2% owning a credit card, indicating that the majority of Moroccan citizens are still relying on physical cash for their transactions.” Egypt had 60% of cash-based payments whereas Kenya (40%), Nigeria (23%), and Philippines (24%) rounded out the top 5. Unbanked There does seem to be a correlation between countries that heavily rely on cash and the amount of their population that is unbanked. In Morocco, 71% of the population is unbanked, 67% in Egypt, 44% in Kenya, 61% in Nigeria, and 65% in the Philippines. For these countries, and many more, the necessity of having access to cash as a form of payment is utterly essential in being able to access everyday goods and services.

After two years of essentially staying put during the COVID-19 pandemic, many people are eager to hit the road again. Traveling abroad significantly increased during the 2002 summer season as travel restrictions to other countries decreased. With people pulling out their suitcases and dusting off their passports, it is important to take stock of the vital items one needs when traveling, including cash. While many countries have increased their ability to use digital technology to a greater extent, other countries, such as Japan and Indonesia still heavily rely on cash. According to Simon Phillips, Managing Director of travel money specialists No1 Currency, cash is still king when it comes to travel. Traveling With Cash is King Phillips recently told a UK publication, “For those of us who seldom use cash in the UK it can be tempting to think that everywhere is going cashless. But cash is still king in many countries. Outside western Europe, app-based and digital payment technologies are very much in their infancy. Even in popular European destinations like Spain, Italy, Germany and France, retailers and restaurants still handle far more transactions in cash than they do by card.” Therefore, experts advise that travelers research their destinations before leaving to help determine how much cash they will need on hand. Regardless of the country’s penchant for digital or cash payments, you will want to have some cash on hand for things like vending machines, lockers, parking meters, tipping, grocery store baskets, etc. Better for Budgeting Additionally, experts find that traveling on a budget is easier when using cash for everyday necessities. It allows travelers to have a better idea of how much they have spent and how much they have remaining in their travel budget.  When looking to exchange U.S. currency for foreign cash, it is important to do your research to see which banks, exchange stalls and ATMs have the best exchange rates. Taking the time to conduct a little research ahead of your trip can end up saving you time and money while abroad. Bon Voyage!

Since the first appearance of George Washington on the U.S. quarter, the likeness of the first President of the United States was that of a side profile facing left. The original likeness was designed by John Flanagan and included on the quarter in 1932. It has been in use on quarters since then. That is, until 2022. American Women Quarters Program As part of the American Women Quarters Program, a “four-year program that celebrates the accomplishments and contributions made by women to the development and history of our country,” the likeness of George Washington was switched from left facing to right facing. This new depiction was originally submitted for use back in 1932, however Treasury Secretary at the time, Andrew W. Mellon, chose in face of Flanagan’s design. The right-facing design was sculpted by the renowned early 20th century sculptor, Laura Gardin Fraser, whose work can also be seen on the 1921 Alabama Centennial Half Dollar, the 1922 Grant Memorial Half Dollar and Gold Dollar, and the 1925 Fort Vancouver Centennial Half Dollar. Switching the direction of the image seems to be following a trend in design. According to Fast Company, “​​Of the 62 Fortune 500 logos that can be said to be facing or moving laterally, 82% go right.” So, I guess we can say that the new depiction is a step in the “right” direction.

In 1979, economic and marketing theorist Elizabeth Hirschman first studied the “Cashless Effect”. According to SciTechDaily, the Cashless Effect “describes our increased willingness to buy products and to pay more for them when no physical money changes hands.” In her first studies, Hirschman believed that people would spend more money when they paid via a credit card as opposed to making a cash purchase. To test her hypothesis, she had a team of interviewers survey customers shopping in different department stores. The interviewers asked customers about the products they had purchased as well as what method of payment they had used. Upon analyzing the data, Hirschman’s hypothesis was proven correct as she found that customers who used either store credit cards or a credit card spent a lot more money than customers who had paid in cash. She also found that customers who had both a store credit card and a regular credit card spent the most money. Spend, Spend, Spend SciTechDaily reports that people who use credit cards tend to spend more, are “less likely to recall their past expenditures, are more likely to focus on and remember product benefits — like product quality, features, looks, the social prestige of owning the product — rather than costs, and make more unplanned, indulgent, and unhealthy purchases. The effect is similar for people who use bank cards rather than cash.” Research conducted after Hirschman’s seminal study in the late 70s largely supports this conclusion. In 1986, economist Richard Feinberg carried out a study suggested classical conditioning, which was backed by a study where volunteers were more willing to purchase goods and pay more for them if shown products with a credit card logo on the product. Feinberg suggests that there is an association between credit cards and spending, which is reinforced by positive associations of spending money to buy things. False Happiness An alternative hypothesis is that credit cards influence our purchasing behavior by making it less “painful” than when we spend cash. This is done by disassociating payments from purchasing, which means we get the joy of buying something new without the pain of having to pay for it right now. Ways to Avoid the Cashless Effect People who are worried about how the cashless effect might affect their bank accounts, there are ways to avoid the issue. If you are wanting to use a credit card in order to receive the points associated with purchases, you can pay off that purchase as soon as it is posted to your account. Additionally, leaving the credit card at home when you go shopping will help deter from unnecessary, additional purchases. Adding up the cost of items in your basket can also give you an idea of how much you are spending before going to the checkout counter. This allows for time to decide whether or not you really need the items you are about to purchase. By committing to using more cash to purchase needed items, customers can help avoid overrunning their bank balances when it comes time to make a credit card payment.

According to data provided by the Federal Reserve, the amount of currency in circulation in the United States has steadily increased over the past two decades.  Dramatic Increase At the end of 2000, the Federal Reserve reported that there were 21.3 billion notes in circulation in the U.S. This includes Federal Reserve notes, U.S. notes and currency no longer issued.  By the end of 2020, the Federal Reserve was reporting that there were 50.3 billion notes circulating in the U.S. – an increase of approximately 150 percent over twenty years. Replacing Unfit Notes As U.S. currency makes its way through the economy, it wears down and becomes “unfit” for use. Each year, the Federal Reserve Board places an order for currency from the U.S. Treasury Department’s Bureau of Engraving and Printing. Many of the ordered notes go on to replace unfit notes. According to the Federal Reserve, the “use the majority of new notes printed each year to replace unfit notes that Reserve Banks have removed from circulation. For example, we estimate that in 2015, 85 percent of the new notes printed will replace destroyed currency, while the remaining 15 percent will meet increased public demand.” Value of Currency in Circulation The value of the currency in circulation has also increased. The Federal Reserve tracks the value of currency in circulation in the billions of dollars. In 2000, the value of the currency in circulation was over $500 – again valued in billions of dollars. However, by 2020, the value of currency in circulation grew to be over $2,000. These steading increases over the decades put to rest the idea that cash is not popular among residents of the U.S. A cash economy remains essential for a vibrant economy.