Fresh Banknotes From Our Central Bank | Bob Klein of Medici Capital

A central bank is what issues the release of banknotes to the public. The U.S. Treasury, however, controls the actual printing of money, though it gets its orders from the Fed. The Federal Reserve also removes worn out, fake and outdated banknotes as time goes on. Through the Bureau of Engraving and Printing, the Treasury Department creates paper currency. Through its resources at the U.S. Mint, the Treasury stamps and designs its coins.

What circulates banknotes into the U.S. economy is the act of lending. Central banks, within a typical economy, rely on commercial banks to request banknotes in the form of a loan. With interest rates, central banks can lend out their own currencies. Bank of America, Wells Fargo and Citigroup receive their working cash as a loan from our central bank. These commercial banks could lend their own money out, but using borrowed cash reduces their risks.

The bill notes that commercial banks receive are then loaned out, with more interest applied, to businesses and private individuals, infusing our economy with new cash. Businesses request these loans in order to buy resources, pay overhead costs and to ultimately produce wages. 

The more notes there are in circulation, the less value they have. 

The Process from Start to Finish

Banknotes can only act as legal tender in circulation when they’ve been issued by the Federal Reserve. When money is needed in cash form, the Federal Reserve places an order for currency with the U.S. Treasury.  Federal Reserve banknotes use what are called identifiers that include a series year, serial numbers, plate numbers, and seals. When ready for printing, the following steps are taken:

- Processing:

Bank note designers at the Bureau of Engraving and Printing develop the overall and artistic details of U.S. paper currency. A hand-engraved die is transferred to a master printing plate and stored to be used again and again as needed. The U.S. Treasury uses a method that prints multiple layers of specially formulated inks onto the surface of paper with security thread and watermarks already built in.

- Materials:

Polymer, nylon, linen and cotton are the central ingredients in modern bill-notes. Large sheets of currency paper are used at first. Once the ink has been pressed and dried, the sheets are trimmed and cut into the actual size of the nation’s currency.

- Durability and Inspections: 

At each stage of the printing process, the sheets are thoroughly examined using state-of-the-art computer technology for quality, durability, and consistency. Inspections and verifications ensure that banknotes are free from minor imperfections and not easily counterfeited later on.