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13 March 2005
East
Rutherford Operations Center The East Rutherford Operations Center is a major processing center for currency, checks, and wire transfers. On an annual basis, approximately $200 billion in cash and $900 billion in checks goes through the facility. Typically, the vaults there hold more than $60 billion in cash. The center also plays a central role in the daily electronic transfer of over a trillion dollars in funds and securities. __________ http://www.newyorkfed.org/aboutthefed/fedpoint/fed11.html Currency Processing and Destruction Federal Reserve Banks handle billions of dollars in currency each day. In the district served by the Federal Reserve Bank of New York (FRBNY), currency is processed at both the Buffalo Branch and the East Rutherford Operations Center (EROC) in New Jersey. Each business day, the FRBNY processes over 13 million notes deposited by depository institutions. The FRBNY deliberately destroys approximately four million unfit currency notes each business day. Most of the resulting shreds are transported to landfills. Each business day, Federal Reserve Banks handle billions of dollars in currency that is deposited by banks. For safekeeping and space reasons, banks send currency to the Reserve Banks when they have more than enough on hand to satisfy their customers' needs. Depending on daily and seasonal fluctuations, an individual bank may deposit funds at a Federal Reserve Bank several times a week. The Bureau of Engraving and Printing (BEP) of the U.S. Treasury, in turn, supplies newly printed cash, and the Bureau of the Mint supplies coin, to the Reserve Banks to fill bank orders. Currency Deposits at the East Rutherford Operations Center (EROC) In the district served by the Federal Reserve Bank of New York (FRBNY), the vast majority of currency processing is performed at the East Rutherford Operations Center (EROC) in New Jersey. The rest is processed at the FRBNY's Buffalo Branch. Banks deliver coin and currency by armored carriers to EROC, a state-of-the-art facility that opened in 1992. The facility, which also processes checks and serves as one of the Federal Reserve System's data processing centers, operates under strict controls. After receiving clearance from FRBNY security, armored carriers deliver currency to EROC's Paying and Receiving Division and place it in a glass-enclosed anteroom under the eyes of Federal Reserve staff and EROC's video surveillance system. After the armored carrier's personnel leave the anteroom, paying and receiving tellers enter to verify the contents of the delivery and issue a receipt. The tellers perform a two-step process. First, they check the integrity of the currency containers, which hold ten 1,000-note bundles and are equipped with seals that change appearance if tampered with. The tellers then scan the bar-coded identification numbers of each container and its seal into EROC's sophisticated computer system, known as the cash processing management system (CPMS). Because an armored carrier delivery may include deposits from several banks, CPMS not only counts the number of containers, but also associates each container with its depositing bank.
The currency is then transported by automated guiding vehicles (AGVs) to EROC's automated currency vault, where it is retrieved on a "first-in, first-out" basis by storage and retrieval vehicles (SRVs). The "people-less" vault, which functions entirely through computers, is believed to be the largest currency vault in the world. The vault has a volume of one million cubic feet, is three stories high, and has 5,400 compartments. The AGVs, the automated vault, the SRVs, and the CPMS automate all movement and tracking of currency. These integrated technologies minimize the handling of currency by EROC employees and create an audit trail of all currency movement from initial receipt through final disposition. The Processing of Currency EROC employees in the currency verification department use high-speed currency processing machines to verify the deposits. AGVs deliver the deposits from the automated vault to currency verification processing rooms, where the currency is fed into the high-speed processing machines. The machines count each note -- at an average rate of 70,000 notes per hour -- and confirm its denomination, fitness, and authenticity, and then automatically bundle fit notes into packages. The fit notes eventually make their way back into circulation when banks order currency from the Fed. In 2000, 15 machines operating 20 hours a day, four days per week, processed about 13 million notes per day with a dollar value of $321 million. Incorrect denominations, suspected counterfeits, and non-machine-readable notes are rejected, and, if necessary, the depositing bank's account is debited or credited. EROC employees inspect suspected counterfeit notes by hand, paying particular attention to the portrait, scroll work, seals, and colored fibers of each bill, as well as to the weight, color, and texture of the paper. Suspected counterfeits are stamped "COUNTERFEIT" and forwarded to the U.S. Secret Service, the Treasury agency charged with maintaining the integrity of the nation's currency. Strict standards are followed when currency is processed at EROC. First, a thorough background investigation is conducted before any employee is hired. Also, the number of people with simultaneous access to the cash is limited. Employees work in teams and must follow specific counting procedures. For example, all cash and employees' hands must be in view of the video surveillance cameras at all times while currency is being counted. In addition, identification cards and uniforms must be worn by EROC employees at all times. Currency Destruction The authorization to destroy currency was given to the Federal Reserve Banks by the Treasury Department in 1966. At EROC, unfit currency is directed automatically to one end of the high-speed currency processor, where stainless steel blades crosscut the notes into confetti-like shreds. In 2000, approximately 29 percent of all notes, or 3.7 million notes with a total dollar value of $77 million, were destroyed at EROC each day. All shreds are sent by vacuum tube to a disposal area one floor below. The shreds from different machines, including the different denominations, are mixed and compressed into briquettes. Each briquette is made up of roughly 1,000 notes and weighs approximately 2.2 pounds. A private contractor picks up the briquettes and disposes of them at landfills. Other Reserve Banks use different disposal methods for the over 17 million pounds of currency removed from circulation each year. Some Reserve Banks sell shredded currency to businesses under Treasury rules. Others turn the shreds into stationery products under a contract with the private stationery company that makes the high-quality cotton bond paper on which currency is printed. The latter two programs not only save the Federal Reserve trash-hauling fees, but also form part of a larger recycling program within the Federal Reserve System. All destroyed currency is replaced by new currency ordered by the Federal Reserve from the Bureau of Engraving and Printing (BEP) at a cost of about four cents per note, regardless of denomination. Reserve Banks provide the BEP with an estimate of new currency needs for the coming year based on the past year's usage. In 2000, the BEP produced nine billion notes of various denominations with a value of approximately $67 billion. Roughly 48 percent of all notes replaced are $1 notes, which have a life expectancy of 18 months. Other denominations remain in circulation longer. A $50 bill, for example, usually lasts nine years.
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