SALT LAKE CITY — The Federal Reserve manages monetary policy, influences interest rates and keeps cash flowing to and from commercial banks and ultimately to the public.
Rarely do people get a look at the inner workings of how the money moves, but on Tuesday, KSL got a tour inside the highly secure Salt Lake branch of the Federal Reserve Bank of San Francisco, where workers in the branch’s cash processing facility were busy inspecting, sorting, storing and distributing large amounts of bills.
“We make sure that there’s an adequate supply of currency to meet the needs of the public here,” Vice President and Regional Executive Abby McLennan said. “Commercial banks — they’re able to deposit and order currency with us.”
McLennan said commercial banks deposit their excess cash as well as old and worn bills, and workers determine every bill’s authenticity and viability for reuse.
According to statistics provided to KSL, workers at five cash processing facilities in the San Francisco region process roughly 25 million notes each day, shredding more than $100 million per day in “unfit” bills, all while serving over 750 financial institutions.
“That’s a great way to describe us — we are the banks’ bank,” McLennan said.
With pallets of money marked with totals like $32,000,000, the sheer volume of cash on hand is staggering to the uninitiated, and even sometimes to those who work around those amounts daily.
“I’ve had a time or two where I’m behind a container that’s being pushed down the hall, and I think, ‘Man, that thing has over $20 million in it,'” McLennan said. “I’ll never have $20 million myself, so it can be a little overwhelming from time to time to take a look at the amount of currency that’s in here.”
It’s a role and a job that workers take very seriously.
“We’re playing such an important role for the American public, making sure the payment systems that we support are always available — cash being one of those,” McLennan said. “You’re unable to make it surreal because of the role that we play at the Federal Reserve.”
McLennan acknowledged in addition to shredding old bills, workers also occasionally spot counterfeits that have somehow made it all the way through the system to them.
“They’re actually sent off to the Secret Service to confirm that they are a counterfeit,” McLennan said. “When you look at the overall amount of currency that’s out in circulation, it’s an extremely minute percentage of notes that are actually counterfeit notes.”
Monetary policy
The Federal Reserve is more frequently in the headlines for its role in managing monetary policy and influencing interest rates, and McLellan said that effort takes root at the local level.
McLellan said she is regularly occupied with gathering perspective and intel from business leaders on a variety of topics that contribute to economics, including tariffs, the current military action in Iran and artificial intelligence.
“Businesses are certainly looking for opportunities to take advantage of AI in order to increase productivity,” she said. “I’m not hearing as much of AI actually replacing employees. It’s really those opportunities to increase efficiency, find ways to do things a little faster.”
She said that perspective is passed up the chain and ultimately factors into discussions during meetings of the Federal Open Market Committee.
Cash going nowhere
While McLennan acknowledged that cash transactions have been declining on some level in favor of card transactions, the rate of decline has flattened.
“We’re thinking potentially we’ve hit that floor,” McLennan said. “More people are using currency as a store of value, so that means where they might not plan on using it for a daily transaction, they do have some cash tucked away, whether that’s on their person or maybe stored in their home, but they have it where it’s available to them as a store of value and should they need to access it they could for a particular reason.”
With that, she expected cash to remain in circulation for the foreseeable future.
“It will be sticking around,” McLennan said. “We do not anticipate it completely going away. There continue to be preferred-use cases where cash is the most valued payment form.”
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