The paper is manufactured by Crane & Company, which has continually supplied the government since 1879. The production of American banknotes is a convoluted process. Reprinting the current design bills will prevent any disruption in the global circulation of US currency. Officials say that is an important step, because there are 6.6 billion $100 notes in circulation at any given time, and they wear out quickly.
But to stave off a cash crunch as existing $100 bills deteriorate and can’t be replaced, the Federal Reserve has ordered renewed production of the current-design $100 bills, which feature Bush Treasury Secretary Hank Paulson's signature and do not have the new security features. The redesigned bills are the first $100 bills to feature Treasury Secretary Tim Geithner’s signature. The problem with the new hundred-dollar bills has remained largely hidden from public view, despite a press release issued by the Federal Reserve on October 1 that announced "a delay in the issue date" of the new bills and cited "a problem with sporadic creasing of the paper." "We're trying to ensure that only the fittest of notes will enter circulation," she said. "We are working really hard to try to get a solution to the problem." Anderson said Treasury has seen encouraging results from several recent tests of the printing process. "A very high proportion of the notes will be fit for circulation," said Darlene Anderson of the Treasury Department. Officials say they remain optimistic that the majority of the 1.1 billion bills will eventually be cleared for circulation. On top of that, it is not yet clear how much more it will cost to sort the existing horde of hundred dollar bills. That means the government spent about $120 million to produce bills it can’t use. American taxpayers have already spent an enormous amount of money to print the bills.Īccording to a person familiar with the matter, the bills are the most costly ever produced, with a per-note cost of about 12 cents-twice the cost of a conventional bill. The defective bills-which could number into the tens of millions, potentially representing billions of dollars in face value-will have to be shredded. Using a mechanized system, they think they could sort the massive pile of bills, each of which features the familiar image of Benjamin Franklin on the face, in about one year. Sorting such a huge quantity of bills by hand, the officials estimate, could take between 20 and 30 years. "The frustration level is off the charts."īecause officials don’t know how many of the 1.1 billion bills include the flaw, they have to hold them in the massive vaults until they are able to develop a mechanized system that can sort out the usable bills from the defects. "There is something drastically wrong here," a person familiar with the situation said. Officials don’t know exactly what caused the problem. For now, the unusable bills are stored in the vaults in "cash packs" of four bundles of 4,000 each, with each pack containing 16,000 bills. The total face value of the unusable bills, $110 billion, represents more than ten percent of the entire supply of US currency on the planet, which a government source said is $930 billion in banknotes. At the time, officials announced the new bills would incorporate sophisticated high-tech security features, including a 3-D security strip and a color-shifting image of a bell designed to foil counterfeiters.īut the production process is so complex, it has instead foiled the government printers tasked with producing billions of the new notes.Īn official familiar with the situation told CNBC that 1.1 billion of the new bills have been printed, but they are unusable because of a creasing problem in which paper folds over during production, revealing a blank unlinked portion of the bill face.Ī second person familiar with the situation said that at the height of the problem, as many as 30 percent of the bills rolling off the printing press included the flaw, leading to the production shut down.