Non-stop money machinery from the Carolinas

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Editor’s Note: In this special series, Mark Washburn gives us an exclusive look inside the Charlotte branch of the Federal Reserve Bank, revealing its vital role in Carolina commerce. Each segment offers a unique glimpse into the invisible engine of our local economy. Our regular Ledgers return next week.

by Mark Washburn

In a city where banks sculpt the skyline with their monumental spires, stands a dwarf structure whose clean but unpretentious sides barely catch the eye.

But oh, just look inside.

Behind its elegant ramparts lies the dynamic machinery of Carolina commerce, a vast automated silver warehouse, a 24-hour mint that powers the region’s economy.

“We try to be a little bit less noticeable,” says Terry Wright. “We don’t want to draw attention to ourselves.”

He is the senior vice president and director of the Charlotte branch of the Federal Reserve Bank, whose treasury on East Trade Street is little known even in ordinary business circles and virtually invisible to the public.

At the request of the Charlotte Ledger, Wright and other Fed officials opened the doors for a closely guarded tour of the massive depository hidden in plain sight, an eight-minute walk from the financial canyon of Tryon Street.

Its impact is staggering. If you spend a $20 bill at Ron Jon Surf Shop in Myrtle Beach or pass a $10 bill at Buck Bald Brewing in Murphy, or any of the thousands of other retailers in the Carolinas, that money will likely land — in a matter of months, weeks or days — on the loading dock at the Charlotte Fed.

There it will be counted, boxed, transported by robots, examined and graded for appearance, and face the ultimate day of reckoning: to be put back into circulation or to be instantly shredded.

Even in the age of electronic transactions, currency still has its place. Tens of millions of dollars of old-fashioned money circulate daily in the Carolinas.

Charlotte is the fourth-largest of the Fed’s 28 treasury offices in terms of currency volume, behind New York, Los Angeles and Miami, and just ahead of Atlanta.

Construction of the Fed branch began in 1986 in the 500 block of East Trade Street in the city’s Justice and Government District. (Photo by Mark Washburn)

It’s safe to say that the Fed is very picky about its currency. If you travel abroad, you’ve probably noticed that the currency of some countries, especially poorer ones, is dirty, worn, or damaged.

These are not Federal Reserve notes, the official currency of the United States. When they come out of the Charlotte Fed, or any other branch, the notes are dressed up for the ball.

There is a reason for this. American bank notes represent – ​​and are supposed to reflect – the financial integrity of the country’s economy.

“We are the world’s default reserve currency,” Wright says. “People trust the U.S. dollar.”

Remarkably, more than 60 percent of U.S. currency is held overseas. And nearly 80 percent of the $100 bills still in circulation are held overseas, according to a study by the Federal Reserve Bank of Chicago.

In 2019, the International Monetary Fund found that the $100 bill had become the most widely circulated (but least observed) U.S. banknote, surpassing the $1 bill for the first time.

There are several theories: financial instability or rampant inflation in some countries make US banknotes the safest currency. They are widely accepted and easily convertible in markets around the world.

And some of it is used to enable crime, tax evasion, drug trafficking and terrorism.

When a natural disaster like a hurricane strikes, banks urgently increase their orders for currency. In the event of a power outage, digital currency loses its luster.

At the start of the Covid pandemic, the local Fed also saw an increase in bank orders for notes as people responded to uncertainty by hoarding cash, said Doug Borland, assistant vice president of treasury services for the Charlotte and Baltimore branches.

Mark Washburn is a retired writer and columnist for the Charlotte Observer who lives in Davidson. Contact him at [email protected].

COMING WEDNESDAY: Follow the money — money flows through the Fed like an industrial commodity.

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Editor in Chief: Tony Mecia; Editor in Chief: Cristina Bolling; Editor-in-Chief: Lindsey Banks; Entrepreneur: Brie Chrisman, BC Creative