Fed adds $200 billion to circulation for Y2Kgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
"The Federal Reserve will provide U.S. banks with an additional $200 billion in cash to cover any surge of year-end withdrawals by customers worried about the year 2000 computer problem, Chicago Fed President Michael Moskow said.
"As a precaution, the Fed will increase the currency in circulation and in our vaults to about $700 billion by late 1999," Moskow said in text prepared for an economic lecture at Middlebury College, in Middlebury, Vermont.
"The Fed has acted to ensure that more than sufficient cash will be available throughout 1999 and 2000," Moskow added.
Currency in circulation is the cash Americans carry in their wallets for daily spending and that currently amounts to about $518 billion, according to the latest Fed's data.
The additional $200-billion cash will boost the volume of U.S. dollars available for or in circulation to about $700 billion. The Fed also keeps cash in its vaults in the event of a sudden demand for the U.S. currency.
The Fed is increasing currency in circulation as the year 2000 nears to avoid panic runs on banks if people fear computer programs will mistake the years 1900 and 2000--the Y2K or "millennium bug" problem--and erase existing balances on their bank accounts.
"I don't know whether people will be wondering whether their ATMs [automated teller machine] will work or not and withdraw a lot of money before December 31," said deputy chief economist Carol Stone at Nomura Securities International.
"But it's prudent for the Fed to prepare for this, by making available to banks extra hard cash in case people do feel that way," Stone added. "After all, some people think the world will end on January 1, 2000, and others may think their money will disappear."
Arlin's comment: am I confused, or weren't they originally saying that they were going to add only $50 Billion to the cash supply?
-- Arlin H. Adams (firstname.lastname@example.org), April 09, 1999
When the Feds first gave out this information they admitted for the first time that they keep $150 Billion in reserve. They stated they were printing an extra $50 Billion. A large percentage of the $518 Billion in circulation is in foreign countries.
-- Joe Stout (email@example.com), April 09, 1999.
To All,Thursday night a Y2K bank mgr came into my store and i was told rather smugly that even with the added monies the bank will hold the option of giving you your money on demand,you will be given a reciept and told to return 7 days later.It was stated that it was in the interest of the bank and the country with no regard to the customer.It makes no difference if they have the cash or not,they will use their discretion as to when/if to allow cash disbursements.If theres a run or even a hint of it they will exercise their options.
To wrap this story up,after 45 min's of a very heated discussion with many other customers spectating the bank mgr. said i was an admirable adversary "for a wine guy" and that he would be back to learn more about Y2K,much to the onlookers chagrin.
I have also been warned by the powers that be not to scare the customers and i'm not even a doomer (5-7 IMHO).Good thing they weren't around Thurs night!!! Just my little y2k story.again thanks to all. Capnfun.
-- capnfun (firstname.lastname@example.org), April 10, 1999.