Cash for Y2K

September 4, 1998
The Federal Reserve plans to increase the amount of currency inventories by a third next year in case Americans want to have more cash on hand when January 1, 2000 arrives. This is the first time the Fed has stated its concern that there may not be enough cash on hand due to fears about the Y2K problem.

Software programs in many mainframe computers eliminated the century digits off the dates, and this may cause problems in banking, communication, and even power. Consumers concerned that ATM machines or credit card purchases may not work are likely to hoard cash. That is why the Federal Reserve wants to add an additional $50 billion in cash reserves next year.

Now while that seems like a lot, a recent article in American Spectator put some of these numbers in perspective. According to the article, there is currently about $586 billion in bills and coins in the economy. Most of the cash in our economy is electronic. If Americans start withdrawing cash from the economy, there might not be enough.

At the moment the Federal Reserve is considering a number of plans. They might speed up putting cash into the economy by adding shifts of workers at the nation's 12 Fed banks, or order the Bureau of Engraving and Printing to print $20 and $50 bills instead of $5 and $10 bills, or they might allow slightly worn U.S. dollars to remain in circulation.

In any case, the Federal Reserve is trying to make plans for a run on currency before January 1, 2000. Only time will tell if it is too little, too late.

I'm Kerby Anderson of Probe Ministries, and that's my opinion.

© 1998 Probe Ministries International