13 March 2005
Rutherford Operations Center
100 Orchard Street
East Rutherford, NJ 07073-2002
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.
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
The FRBNY deliberately destroys approximately four million unfit currency
notes each business day. Most of the resulting shreds are transported to
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
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
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.
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.