U.S. Currency

Printing of Flawed Redesigned $50 Notes Gao ID: T-GGD-98-8 October 1, 1997

A redesigned $50 dollar note with a new feature to deter counterfeiting was due for introduction in October 1997, but initial printing runs included flawed bills. Treasury Department officials have yet to determine how many of the 217 million bills are defective. This testimony discusses (1) how many of the flawed notes were produced, (2) how the production of the flawed notes came about, (3) what actions are planned in response to this incident and what the costs associated with the notes are, and (4) what lessons have been learned from this experience that could be applied to the future production of redesigned U.S. currency.

GAO noted that: (1) neither the Bureau of Engraving and Printing (BEP) nor the Federal Reserve know specifically how many flawed notes are among the 217.6 million redesigned notes produced before September 8, 1996; (2) BEP views the problem as a start-up issue to be expected with production of a completely new note design; and (3) Federal Reserve officials have not decided what to do with the flawed notes, but have identified three options: (a) destroy all 217.6 million redesigned notes and replace them; (b) inspect the 217.6 million notes and destroy and replace only those notes that are found to be flawed; or (c) circulate the 217.6 million notes after the higher quality new notes have been in circulation for a few years.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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