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Thursday, Aug. 20, 1998
Fed plans to have more cash on hand for Y2k worrywarts
An extra $50 billion will be stored in government vaults, just in case
By DAVE SKIDMORE
Associated PressWASHINGTON -- The Federal Reserve is planning to increase its reserves of currency in case Americans want more cash in their pockets on the eve of the new millennium.
By the end of next year, $200 billion in currency will be stored in government vaults, up from the $150 billion normally held in reserve. That's in addition to the $460 billion in notes circulating in the United States and abroad.
``It's purely a precautionary measure,'' said Clyde Farnsworth, director of Federal Reserve Bank operations and payments systems. ``We want to be able to meet increased demand from commercial banks should private consumers request more currency.''
The thinking is, Americans might worry about whether credit cards and automated teller machines will still work after the new century dawns. Many older computers read years by the last two digits and would interpret 2000 as 1900.
An army of computer programmers is working intensely to correct old computer codes, but they probably won't be able to correct them all and there's a lot of uncertainty about what could happen.
If faced with difficulty using a credit-card or ATM, many consumers would simply write more checks. But Federal Reserve officials want to make sure teller windows are well-supplied with cash just in case people decide they want it.
``We attempted to look at normal spending patterns for households and we estimated the amount of currency people might need for necessities, groceries and things like that, for a period of two weeks,'' Farnsworth said Wednesday. ``We assume people are not going to take out cash to buy automobiles.''
The Federal Reserve's plan means the Treasury Department's Bureau of Engraving and Printing will print more currency over the next year and less currency than usual in the year after that.
``It just means we're printing the currency earlier than we normally would,'' Farnsworth said.
Lou Marcoccio, research director for the Gartner Group, a Stamford, Conn., consulting firm, advised clients that the Fed's plan should provide ``a more than comfortable safety margin'' of cash.
``If withdrawals are made by the public they are expected to be relatively small cash amounts where bank customers hope to cover critical expenses over a short millennium rollover period,'' he said.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web