1. “Effects of the Financial Crisis on Currency Demand” 3 rd International Conference Moscow, Russia November 17-18, 2009 Michael J. Lambert Assistant Director Board of Governors of the Federal Reserve System

2. 2 Outline General Trends in Currency in Circulation General Economic Indicators Changes in Demand for U.S. Currency Current Conditions Conclusion

3. Currency in Circulation: Value and Percent Change 1960 - 2008 3 Source: Board of Governors H.4.1 Report 2008: 7.7%

4. Number of Banknotes in Circulation: 1960 - 2008 4 Source: U.S. Treasury Currency and Coin Report

5. Value of Currency in Circulation: Growth Rate Comparison 5 * Data through August 2008

6. General Economic Indicators: Gross Domestic Product 6 Source: Bureau of Economic Analysis

7. General Economic Indicators: Prime Interest Rate 7 Source: Board of Governors

8. General Economic Indicators: Unemployment Rate 8 Source: Bureau of Labor Statistics

9. General Economic Indicators: Personal Saving Rate 9 Source: Bureau of Economic Analysis

10. General Economic Indicators: Consumer Confidence 10 Source: Survey Research Center: University of Michigan

11. Value of Currency in Circulation: 2004 - 2009 11 Source: Board of Governors H.4.1 Report Dec. 2004: $720

12. Value of Currency in Circulation: 2005 - 2009 12 Source: Board of Governors H.4.1 Report

13. Banknotes in Circulation: Type of Use 13 Source: U.S. Treasury Currency and Coin Report

14. Value of Currency in Circulation: Transactional Denominations 14 Source: U.S. Treasury Currency and Coin Report

15. Value of Currency in Circulation: Store of Value Denominations 15 Source: U.S. Treasury Currency and Coin Report

16. Currency in Circulation: Value by Week 2005 - 2009 16

17. Payments to Circulation: 2005 - 2009 17 Source: Federal Reserve System National Cash Data Warehouse

18. Net Payments to Circulation: 2006 - 2009 18 Source: Federal Reserve System National Cash Data Warehouse

19. Domestic Vault Cash 19

20. BEP $100 Note Production 20

21. Value of Currency in Circulation: Growth Rate Comparison 21 * Data through September 2009 0.8% Growth through August 2008

22. Conclusions Currency in circulation continues to grow. –Moderation began in the 2000s. Economic and political uncertainties continue to drive demand. –Recent financial instability indicates the broad effect of the global crisis and the demand for $100 notes. Electronic payments likely having effect on growth rates. –Debit card growth exceeds the decline in check usage. 22