The Federal Reserve is ready to flood the U.S. with coronavirus-free banknotes – but doesn’t anticipate that happening just yet, according to a spokesman for the central bank’s Philadelphia branch.
For now, the Fed does not think that “cash destruction” will be necessary to stymie the spread of the novel coronavirus. COVID-19 has quickly overtaken vast swaths of the east and west U.S. coasts, sending states into lockdown and forcing non-essential commerce to a blistering halt.
But the spread is largely happening via “person-to-person contact,” not cash exchanges, said the Federal Reserve Bank of Philadelphia spokesman, Joey Lee, citing Centers for Disease Control (CDC) findings.
As such there’s no need to destroy potentially infected banknotes from hardest-hit regions, according to the Fed. The People’s Bank of China reportedly took that step last month when it seized all banknotes processed in high-risk COVID-19 zones, according to the South China Morning Post.
“While the Federal Reserve is not considering cash destruction, the Federal Reserve System always has a contingency stock of new currency that can be circulated to the public and is staying in close contact with the CDC to ensure we are aware of the latest thinking on how COVID-19 spreads,” Lee said.
Changing behaviors
The Fed has unveiled a slew of programs, rate cuts and initiatives to keep the U.S. economy afloat in recent days.
In addition to those macroeconomic policy actions, coronavirus is also changing the way the Fed handles its physical notes.
For example, it has begun quarantining U.S. dollars shipped from overseas – first Asia and now Europe as well, according to Lee.
“As a precautionary measure, cash handling procedures have been modified at Reserve Banks that receive currency shipments from Asia and Europe to provide for a longer holding period of 7 to 10 days before processing these deposits,” he said.