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Fed Reserve stocks cash for Y2K

Will tense Americans want extra cash on December 31, 1999? The Federal Reserve plans to stock up an additional $50 billion just in case.

Will tense Americans want to stuff their pockets with extra cash on December 31, 1999?

The Federal Reserve plans to stock up an additional $50 billion in cash just in case they do.

The Fed is worried that the impending turn of the millennium might cause people to worry about whether credit cards and automated teller machines will still work after January 1, 2000. Nervous consumers might pocket extra cash just in case, the thinking goes.

By the close of next year, $200 billion in currency will be stored in government vaults, up from the $150 billion normally held in reserve, Fed sources said. That's in addition to the $460 billion in notes circulating in the United States and abroad.

A Fed official said yesterday that the stepped up currency printing "is purely a precautionary measure" and that normal currency print runs will resume in 2000.

Many officials fear the impact of the Year 2000 bug on the nation's banks and financial institutions and plan to stash cash in other places to play it safe during the first months of the new century.

The Y2K bug comes from antiquated hardware and software formats that denote years in two-digit formats, such as "98" for 1998 and "99" for 1999. The glitch will occur in 2000, when computers are either fooled into thinking the year is 1900 or interpret the 2000 as a meaningless "00." The glitch could throw out of whack everything from bank systems to building security procedures, critics warn.

Reuters contributed to this report.