News

New custodial inventory, cross shipping rules spur change

The Fed's new rules related to cross-shipping are hitting major banks and forcing them to change their ways.

October 7, 2007

Over the past three decades, the value of U.S. currency has grown from $93.4 billion in 1977 to $783.2 billion in 2006. The number of pieces of currency in circulation also has increased, from 7.5 billion notes in 1977 to 26.4 billion in 2006. At the top of that flowing cash tower is the Federal Reserve and its 12 banks.

The Fed exists for three purposes: to manage the quality and integrity of the nation's cash, to remove bad/unfit and counterfeit currency from circulation, and to supply fit notes for the banks' and public's use.

With all of that money flying around, banks have leaned on the Fed to hold their cash, since the goal of every U.S. bank is to keep the cash balances they hold in their vaults as low as possible. Banks also have asked the Fed to be responsible for sorting, determining the fitness of and bundling denominations, and later having the Fed send fit currency back when the banks order it.

All of that activity, known as "cross shipping," is expensive and inefficient. To improve the process, the Fed has developed new policies and procedures designed to reduce the use of Federal Reserve Bank cash-processing services.

In this white paper from Transoft International Inc., the ins and outs of cross shipping, and the Fed's new rules, are examined and broken down.

Download this white paper.

Editor's Note: This white paper was provided by Transoft International. Statements made in the text reflect the views and/or opinions only of the sponsor.