Neither BEP nor the Federal Reserve know specifically how many flawed notes are among the 217.6 million redesigned notes produced before September 8, 1997. How Did the Production of Flawed Notes Come About? BEP viewed the problem as a start-up issue to be expected with production of a completely new note design. The Federal Reserve has identified three options that it is considering: destroy all 217.6 million phase I and phase II $50 notes and replace them; inspect the 217.6 million phase I and phase II $50 notes and destroy and replace only those notes that are found to be flawed; or circulate the 217.6 million phase I and phase II $50 notes after the higher quality new notes have been in circulation for a few years.
Why GAO Did This Study

GAO discussed issues related to the Treasury's recent production of flawed, newly redesigned $50 notes.

What GAO Found

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.