Coin and Currency Production

This testimony focuses on ways to decrease the cost of producing the nation's money. GAO discusses (1) the effects of decisions on the denominational mix of coins and currency on capital investment plans and production costs, (2) possible structural changes in the entities involved in producing money, (3) additional contracting out of money production, and (4) the planning of money production.

GAO noted that: (1) both the U.S. Mint and the Bureau of Engraving and Printing (BEP) have significant capital investment plans that are based on the current denominational mix of coins and currency; (2) however, proposals have been made to change the current denominational mix; (3) implementation of some of those proposals could have a significant impact on the current capital investment plans of the Mint and BEP; (4) Treasury has considered whether merging BEP and the Mint and placing BEP under the Federal Reserve System would produce cost savings; (5) however, in studies it conducted, Treasury concluded that cost savings may be possible but that the overall disadvantages may outweigh the advantages of such organizational changes; (6) Federal Reserve officials also identified concerns about placing BEP under the Federal Reserve system; (7) neither the studies that were done nor Treasury officials GAO contacted provided information explaining the basis for savings or costs associated with organizational changes; (8) although some other countries rely on the private sector for money production to a greater extent than the U.S. does, Treasury has not examined the possibility of further contracting out of money production primarily because of security concerns; (9) BEP is in the process of attempting to obtain competition for currency paper; (10) it is unclear whether BEP will be successful; (11) strategic plans of the Mint and BEP do not consider the total cost to the government of producing and distributing the current denominational mix of coins and currency or of an alternative mix; and (12) planning that considers such changes and their governmentwide implications might provide additional insights for Treasury and congressional decisionmaking.