What Does US Treasury Do with Old Money?
The United States Treasury operates and maintains systems that are critical to the nation’s financial infrastructure, such as producing the coin and currency.
Treasury’s mission highlights its role as the steward of U.S. economic and financial systems, and as an influential participant in the world economy.But what does US Treasury do with old money?
The United States Treasury asks the banks to exchange or return old, worn or torn money for new. Damaged and worn out coins in the mints get melted and converted into new coins.
When worn-out bills arrive at a Federal Reserve Bank, the old currency gets shredded in a machine called a macerator, which shreds the bills into tiny confetti-sized pieces of paper.
However, the Bureau of Engraving and Printing sells small quantities of old money coins as souvenirs. Larger quantities are available to artists and manufacturers, with consent of the US Treasury Department, Federal Reserve Bank and Environmental Protection Agency.
Money wears out from constant handling, and is sometimes damaged or destroyed accidentally. The average life of a $1 bill, for example is about 18 months. Larger denominations usually last longer, since they don’t circulate as often as the $1 bill.
Apart from the worn-out bills the U.S. Dollar has many discontinued denominations. The United States has produced several coins and banknotes of its dollar which no longer circulate for specific reasons such as inflation reducing their value, a lack of demand, or being too similar to another denomination.