What is the intent of the Recirculation Policy? Do the Federal Reserve Banks intend to get out of the cash business?
Depository institutions (DIs) are expected to supply fit currency from their customers’ deposits to meet other customers’ needs before turning to Reserve Banks to obtain currency. DIs should deposit only surplus or unfit currency with Reserve Banks. As the nation’s Central Bank, the Federal Reserve continues to play an active role in the provision of cash services to DIs, particularly as an intermediary between DIs that have a surplus of fit currency and those that do not have enough to meet customer needs from an internal source.
