The introduction of a new $100 bill is still five months away, but it's not too soon for banks and ATM manufacturers to begin preparing for its rollout.
The notes, which incorporate a series of features designed to deter counterfeiters, are slated to be available starting Oct. 8. Roughly 8.7 billion $100 notes circulate worldwide, or about 26% of all U.S. currency in circulation, according to the Federal Reserve.
Distributing all those bills the highest-value U.S. denomination in circulation takes coordination between the Fed and banks, which send out the new notes out through their networks and, over time, collect and return to the government the notes the new bill replaces.
"Putting a redesigned note into circulation is a big endeavor," says Michael Lambert, an associate director of payment operations at the Fed. "Financial institutions play an important role."
At rollout, the Fed expects to have on hand about 3.6 billion pieces of the new currency. In all the central bank expects to replace about half the $100 bills by October 2014.
To reach that goal, the Fed has ordered about 2.5 billion in $100 notes from the Bureau of Engraving and Printing, the Treasury Department unit that prints America's paper money. The order supplements 1.1 billion in $100 bills that already have rolled off presses in Washington, D.C. and Fort Worth, Texas.
Many of the notes will head overseas, where about two-thirds of U.S. currency circulates. Some will head directly to countries such as East Timor, Ecuador and Panama that have adopted U.S. dollars as their national currency, or to nations such as Liberia, Cambodia and the Bahamas, which use U.S. dollars for paying wages and taxes.
The bills also likely will head to Nigeria, Zimbabwe, Russia and other places where people tend to hold U.S. notes even though the nations themselves have not adopted the currency as legal tender.
The same goes for sovereign governments that like to keep U.S. currency in their reserves. "Governments, like any investor, will hold currency, just like you hold some bills in your wallet," says Andrew Ang, a professor of finance at Columbia University's graduate school of business.
Notes go out from the Fed the world through the financial network and return by the same route. To facilitate the flow, the Fed has agreements with four institutions Bank of America (BAC), United Overseas Bank of Singapore, Royal Bank of Scotland and Commerzbank that serve as custodial banks.
As part of readying the rollout, the Fed also has sent more than 300 cables to American embassies and consulates worldwide that address questions State Department officials anticipate from varied places.
At home, the Fed ships the currency in waves: from the Treasury's printing plants to vaults at the Bureau of Engraving and operations centers the Fed maintains in East Rutherford, N.J., and Dallas.
Over time, the regional Fed banks and cash offices will replenish their existing stockpiles of $100 bills with the new designs.
On most days, billions in currency moves through Bank of America and other large financial institutions, says Jaime Sobrepera, who supervises cash and transportation services for Bank of America, adding that demand for cash can change daily. "Events like the Super Bowl and big golf tournaments could all impact the demand for cash."
Sobrepera and his team follow the lines of storms that sweep across the country and fill ATMs and banking centers ahead of storms. Big companies, like Home Depot and Nordstrom, perform similar calculations of their own and will order more cash in advance of bad weather, according to Sobrepera.
JPMorgan Chase (JPM) spokesman Jeff Lyttle says company has recently turned to planning for the currency. "There's some fervor because of a dramatically new design," Lyttle says. "It's not a huge note for us in our branches, but we expect this will be a popular one to give at the holidays."
Work on the new notes has been underway since July 2010, when the Fed unveiled the new design. Though the Fed had hoped to put the notes into circulation in February 2011, a snag in the printing the paper tended to crease sporadically during test runs delayed the launch.
Over that time, the Bureau of Engraving and Printing has provided test copies of the bills to makers of automated teller machines and bill counters so that the devices will recognize the new bills.
"If you think of it like a deck of cards, there are multiple versions of each bill," says Bryan Glatt, vice president of cash recycling for Wincor Nixdorf. "Our machines have to be able to accept every one."
Glatt says Wincor Nixdorf already has programmed the software that runs the note validator in its ATMs and currency counters to recognize the new $100 bill. Other ATM makers, including NCR and Diebold, have done the same.
The Fed has produced training materials in nearly 30 languages to help banks, retailers, casinos and others ready to recognize the new currency.
The U.S. Secret Service also is planning to train banks about the new bills and their security features.
Though the design preserves the familiar watermark portrait of Ben Franklin, the note adds his shoulders and removes the oval that had hovered in the background.
The bill's most striking addition may be a blue security ribbon woven into the paper along. When tilted, the ribbon reveals images of bells. The design also adds a bell inside an inkwell. When tilted, the bell turns from copper to green.
The note also retains some security features from prior designs, including an embedded thread that glows pink when exposed to ultraviolet light. Intaglio, a method of printing that depresses the surface, gives the bill texture.
The note features a pale blue background, which replaces the traditional green. Though the hue gives the note a more modern look, the Fed warns against using color to confirm the authenticity of the note. Counterfeiters can duplicate color, according to the Fed.