Thursday, September 6, 2018

The Future of Money: Coins

Statement of David J. Ryder, Director, United States Mint, United States Department of the Treasury,

before the Subcommittee on Monetary Policy and Trade: House Committee on Financial Services

The Future of Money: Coins and Banknotes” — September 5, 2018

Chairman Barr, Ranking Member Moore, and Members of the Subcommittee, it is my honor to appear before you, and I thank you for the opportunity to testify during this hearing.

I look forward to updating you on the United States Mint’s progress as a first class manufacturer and an organization driven by the commitment to outstanding products and customer service. Today, my goal is to share the vision of the Mint’s operations and programs, discuss our circulating coins, alternative metals, bullion, and commemorative coin programs, and update you on our future endeavors.

During my nomination hearing, I discussed financial awareness education for our youth to improve our customer base, various technologies that will be analyzed as a way to improve the security of our coinage, and technologies to improve our operations. I plan to update you today on these initiatives, as well.

The Future of Money: Banknotes

Statement of Leonard R. Olijar, Director, Bureau of Engraving and Printing, United States Department of the Treasury,

before the Financial Services Committee, Subcommittee on Monetary Policy and Trade, United States House of RepresentativesSeptember 5, 2018

Good morning Chairman Barr, Ranking Member Moore, and distinguished members of the subcommittee. Thank you for inviting me to testify before you today about transformative initiatives underway at the Bureau of Engraving and Printing (BEP).

As you know, the mission of the BEP is to develop and produce United States currency notes that are trusted worldwide. BEP’s vision is to maintain its position as a world-class securities printer, providing our customers and the public superior products through excellence in manufacturing and technological innovation.

Cash Demand

The demand for United States currency remains strong.
  • There are now more than 42 billion notes in circulation, with a value of more than $1.7 trillion – more than ever before, and cash in circulation continues to grow almost 5% per year. 
  • Approximately 7 billion notes have been ordered annually for the past decade. 
  • According to the Government Accountability Office, “the volume of U.S. currency notes in circulation increased by 43 percent from 2008 to 2016.” 
  • Up to two-thirds of the value of U.S. currency is held overseas, where United States’ currency remains the world’s currency. It is the most trusted international store of value, and serves as a hedge against uncertainties, natural disasters, and political turmoil. Any time there is political instability, the rush is on for United States currency. 
  • Over the past several years, the frequency of cash use remained unchanged; approximately 32% of all transactions, and more than 50% of all transactions under $25 are done in cash, in spite of the availability of other forms of payment.

In the past five years, several small countries have set a goal of going cashless. However, more recently, they have recognized that a cashless society presents a significant economic risk and neglects to account for those who do not have access to smart phones, computers, banks and credit. I believe that 21st century warfare has a significant cyber component, and these countries are now recognizing the risk – if your enemy is able to take down your electronic infrastructure, or if a natural disaster hits, there will be no way to conduct commerce in a cashless environment, and the economy will be crippled. With respect to access to financial institutions, seven percent of U.S. households are unbanked, and almost twenty percent are underbanked. As a result, over 45 million U.S. households do not have access to the payment systems that are used in lieu of cash. Like other nations, our duty to serve this portion of the population is a factor in slowing any move to a cashless economy.

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