[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
                          THE FUTURE OF MONEY:
                          COINS AND BANKNOTES

=======================================================================

                                HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON MONETARY

                            POLICY AND TRADE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 5, 2018

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 115-113
                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          
                           _________ 

                U.S. GOVERNMENT PUBLISHING OFFICE
                   
 31-573 PDF              WASHINGTON : 2018                                
                           
                           
                           
                           
                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
STEVAN PEARCE, New Mexico            GREGORY W. MEEKS, New York
BILL POSEY, Florida                  MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri         WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan              STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin             DAVID SCOTT, Georgia
STEVE STIVERS, Ohio                  AL GREEN, Texas
RANDY HULTGREN, Illinois             EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida              GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina     KEITH ELLISON, Minnesota
ANN WAGNER, Missouri                 ED PERLMUTTER, Colorado
ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
LUKE MESSER, Indiana                 DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado               JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine                JOYCE BEATTY, Ohio
MIA LOVE, Utah                       DENNY HECK, Washington
FRENCH HILL, Arkansas                JUAN VARGAS, California
TOM EMMER, Minnesota                 JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York              VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan             CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia            RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana

                    Shannong McGahn, Staff Director
               Subcommittee on Monetary Policy and Trade

                     ANDY BARR, Kentucky, Chairman

ROGER WILLIAMS, Texas, Vice          GWEN MOORE, Wisconsin, Ranking 
    Chairman                             Member
FRANK D. LUCAS, Oklahoma             GREGORY W. MEEKS, New York
BILL HUIZENGA, Michigan              BILL FOSTER, Illinois
ROBERT PITTENGER, North Carolina     BRAD SHERMAN, California
MIA LOVE, Utah                       AL GREEN, Texas
FRENCH HILL, Arkansas                DENNY HECK, Washington
TOM EMMER, Minnesota                 DANIEL T. KILDEE, Michigan
ALEXANDER X. MOONEY, West Virginia   JUAN VARGAS, California
WARREN DAVIDSON, Ohio                CHARLIE CRIST, Florida
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    September 5, 2018............................................     1
Appendix:
    September 5, 2018............................................    33

                               WITNESSES
                      Wednesday, September 5, 2018

 Olijar, Leonard R., Director, Bureau of Engraving and Printing..     5
 Ryder, David J., Director, United States Mint...................     7

                                APPENDIX

Prepared statements:
     Olijar, Leonard R...........................................    34
     Ryder, David J..............................................    84

              Additional Material Submitted for the Record

Barr, Hon. Andy:
    Written statement from Sonecon...............................    92


                          THE FUTURE OF MONEY:



                          COINS AND BANKNOTES

                              ----------                              


                      Wednesday, September 5, 2018

                     U.S. House of Representatives,
                                   Subcommittee on Monetary
                                          Policy and Trade,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:06 a.m., in 
room 2128, Rayburn House Office Building, Hon. Andy Barr 
[chairman of the subcommittee] presiding.
    Present: Representatives Barr, Williams, Lucas, Huizenga, 
Pittenger, Love, Hill, Emmer, Mooney, Davidson, Tenney, 
Hollingsworth, Moore, Foster, Sherman, Green, Kildee, and 
Vargas.
    Chairman Barr. The subcommittee will come to order. Without 
objection the Chair is authorized to declare a recess of the 
Committee at any time. All members will have 5 legislative days 
within which to submit extraneous materials to the Chair for 
inclusion in the record.
    This hearing is entitled, ``The Future of Money: Coins and 
Banknotes.'' I now recognize myself for 4 minutes to give an 
opening statement.
    Despite all the focus on innovative ways to exchange value 
or settle transactions, Bitcoin, Apple Pay, Venmo, and dozens 
more and with the increasing use of credit and debit cards, 
coins and currency still are a major factor in our retail 
economy.
    Cash may not be king anymore but it is still royalty and 
many Americans have a little of it in their pocket or purse 
right now. Even so, there is a really large amount of United 
States coins and banknotes circulating, all $1.7 trillion or so 
of it produced by one of two bureaus of the Treasury 
Department: The Bureau of Engraving and Printing, which prints 
Federal Reserve notes and the United States Mint, which makes 
our circulating coins as well as some investor and collector 
coins.
    The nearly 4,000 people who work at those bureaus do a 
terrific job. That being said, it is up to Congress to ensure 
that the Mint and the Bureau of Engraving and Printing remain 
effective and efficient and have adequate plans for the future, 
a future where innovative payment options are likely to 
multiply and usage likely to grow.
    To that end, today the Monetary Policy Subcommittee 
welcomes the directors of the two bureaus to continue that 
discussion. There are real issues, real issues that have real 
impacts on both the economy and the Treasury's General Fund in 
the near-term and, particularly, in the long-term.
    One of those issues, that Congress has been prodding the 
Mint on for a decade, is the cost to produce circulating coins. 
The penny and the nickel both cost considerably more than their 
face value to produce.
    Thirty years ago, Canada and the United Kingdom changed to 
steel coins plated to look and function like their previous 
coins which in turn saved a lot of money and now these 
countries contract manufacture coins for a number of other 
countries.
    Why hasn't the United States been the leader? Why didn't we 
emulate them when their move turned out to be successful? Have 
we just wasted tens or hundreds of millions of dollars for no 
good reason?
    There are other coin-related issues, Congressman Mooney has 
been a leader in pointing out that there is an increasing 
problem of counterfeit copies of the Mint's American Eagle 
investment coins, a problem that defrauds both investors and 
dealers. Again, other Mints around the world have inserted 
anti-counterfeiting technology into their bullion but the U.S. 
Mint hasn't, why not? To be sure in our discussions with the 
Secret Service, there are anti-counterfeiting measures that 
have been put into place but we want to explore improvements in 
that area.
    Additionally, the Bureau of Engraving and Printing would 
like a new printing plant to replace its well-known one just 
down the street. That is potentially a reasonable request but 
more work probably needs to be done on cost controls and on 
pinpointing future banknote demand. Right now, spending close 
to $1.5 billion dollars to save $40 million a year makes sense 
if demand for banknotes stays the same until maybe 2050 but not 
everyone imagines that demand will hold up.
    Finally, I hope that we will hear that the bureaus have 
contingency plans for the possibility that the demand for all 
cash and coins could dry up fairly quickly. It is unknown 
whether we are moving that rapidly to a cashless society but it 
is worthy of exploration.
    If that were to happen over just a few years, we would have 
about 4,000 employees and four major factories to think about 
repurposing. Additionally, the ability of the U.S. Mint to 
collect seigniorage from coins could be greatly reduced, 
ultimately increasing the Federal Government's deficit by 
hundreds of millions of dollars annually and there may be 
logistical difficulties with converting paper and coin money 
into another currency medium.
    I don't see that happening anytime soon, if at all, but 
someone needs to be thinking about it and I hope the directors 
can give us a hint about such plans.
    The Chair now recognizes the Ranking Member of the 
subcommittee, the gentlelady from Wisconsin, Gwen Moore for 5 
minutes for an opening statement.
    Ms. Moore. Let me join the Chairman in welcoming our 
esteemed witnesses for the day.
    As I was cleaning my bedroom and picking up all the pennies 
on the floor, this is a very appropriate time to talk about 
this matter, finding a little jar to put them in.
    I would yield the balance of my time to Mr. Sherman from 
California.
    Mr. Sherman. Thank you.
    Most transactions are through an electronic payment system. 
We have to make sure that remains in U.S. control. If we push 
Europe too hard they will invent a system to close major oil 
and other major transactions without touching U.S. soil or 
perhaps U.S. currency.
    ``Future of Money'' is not cyber and as the Chairman points 
out the seigniorage is very valuable to the United States, we 
should not lose it nor should we create a method of payment 
that, while it can be used and is often used for legitimate 
transactions, is particularly well designed for tax evasion and 
the evasion of sanctions legislation.
    As to the currency we can actually touch, as long as we 
have a paper dollar people will not use a dollar coin. We would 
save an awful lot of money at the Federal level if people would 
use a dollar coin because it costs so much to make a paper 
dollar, it doesn't last that long or doesn't last nearly as 
long as a coin, after all we have coins from the Roman Empire; 
coins last a long time.
    But the real savings of having a society in which people 
carry dollar coins will be its use by transit systems and 
vending machines, although gradually our technology is taking 
us beyond the need for a coin in either of those cases.
    We ought to abolish the penny. It is not inflationary. If a 
merchant is going to charge you 23 cents for an orange and 
round it up to 25, then buy two oranges for 46 cents and round 
it down to 45 cents.
    Every transaction we engage in is actually a rounded 
transaction because when you apply State and local sales tax to 
a transaction, you never bought anything at a store that was 
exactly $6.92, there was tax, it was six dollars ninety-two 
point three cents and the merchant rounded it to the nearest 
penny. If we can round to a penny, we can round to a nickel.
    I know the Illinois delegation has historically favored 
retaining the penny because it has Abraham Lincoln on it. Back 
when a penny was worth something, as it was in Lincoln's day, 
it was an honor to be on the penny. Today if you were to 
scatter pennies around the room you would not be enriching 
those who walk by, a penny on the ground is litter.
    So if we abolish the penny there is room in the cash 
register for a dollar coin, we save a lot of zinc, a little bit 
of copper, or a fair amount of money and we do not make 
transactions at the store more difficult nor do I think that 
any merchant will calculate the price of an orange on the 
theory that you will buy just one and that you will owe 23 
cents and it will get rounded up to 25 cents which you can 
always buy two oranges, they are delicious and they come from 
California.
    I will yield back the balance of my time back to the 
Ranking Member.
    Ms. Moore. I am excited to hear your testimony and I yield 
back.
    Chairman Barr. The Ranking Member yields back the balance 
of her time.
    The Chair now recognizes the gentleman from West Virginia, 
Mr. Mooney for 1 minute for an opening statement.
    Mr. Mooney. Thank you very much Mr. Chairman.
    Welcome Director Olijar and Director Ryder, I really 
appreciate you being here, look forward to working with you in 
the future, getting a better understanding of how the Bureau of 
Engraving and Printing and the U.S. Mint view the future of the 
U.S. currency.
    I thank the Chairman for his comments.
    I have taken a special interest in coins and fraudulent 
attempts from other countries. I have been concerned about what 
has been without question a lack of attention to address the 
growing problem of high-quality counterfeits coming from China 
and elsewhere but especially China. They seem to want to hack, 
steal our intellectual property, counterfeit, they seem to be 
very, extra, extra good at coming to this country and causing 
problems.
    It is important that we secure U.S. coins, minted of gold, 
silver, platinum, and palladium which happens to be the only 
sound money currency minted in the United States.
    I did recently meet with the Secret Service to discuss 
their role in combating counterfeit currency flooding our 
market. During our meeting they reported they have been working 
on at least 15 major cases over the past 2 years.
    The Secret Service did voice some frustration about 
obtaining support from the U.S. Mint when it comes to 
investigating and curtailing the growing counterfeiting 
problem.
    Since that meeting and sharing information with the U.S. 
Mint, I have really not seen evidence that the U.S. Mint 
intends to meet the standards set by several foreign mints who 
have adopted various anti-counterfeiting technologies that are 
in existence and in use very effectively.
    In addition to discussing the anti-counterfeiting measures, 
I hope to hear from both of you, both directors, regarding the 
stability of the U.S. currency, how we can ensure a strong and 
stable currency for the American public, through sound Monetary 
Policy which may also include a discussion of returning to the 
gold standard; I have a bill that does that, ``and not relying 
solely on the full faith and credit of the U.S. Government,'' 
quote/unquote.
    Again, I appreciate the opportunity to hear from Director 
Olijar and Director Ryder on this important issue.
    Chairman Barr. The gentleman's time has expired.
    Today we welcome the testimony of Director Olijar, who 
became the Director of the Bureau of Engraving and Printing in 
May 2015, after serving as the BEP's Deputy Director, from 2012 
to 2014.
    Mr. Olijar began his career at the BEP 30 years ago in 1988 
as a Systems Accountant and rapidly advanced. In 2006 Mr. 
Olijar was appointed the Chief Financial Officer of the Bureau 
of Engraving and Printing. Mr. Olijar graduated magna cum laude 
from the University of Colorado in 1987. He received the Gold 
Medal Award for the highest score in Virginia on the Certified 
Public Accountant Exam and scored in the top 1 percent in the 
Nation. Mr. Olijar resides in Northern Virginia with his wife 
and two daughters.
    We also welcome Director Ryder, who is the 39th United 
States Mint Director. Mr. Ryder also led the Mint as its 34th 
Director from September 1992 to November 1993, during the 
Administrations of President George H. W. Bush and President 
Bill Clinton.
    Most recently Ryder was the Global Business Development 
Manager and Managing Director of Currency for Honeywell 
Authentication Technologies. Previously, Ryder served as the 
CEO of Secure Products Corporation which was acquired by 
Honeywell in 2007.
    In addition to the United States Mint, Ryder's prior 
government service included Deputy Treasurer of the United 
States; Deputy Chief of Staff to Vice President Dan Quayle; and 
Assistant to Vice President George H. W. Bush. Mr. Ryder 
attended Boise State University and is married with two 
children.
    Each of you will be recognized for 5 minutes to give an 
oral presentation of your testimony. Without objection each of 
your written statements will be made part of the record.
    Director Olijar you are now recognized for 5 minutes.

                   STATEMENT OF LEONARD OLIJAR

    Mr. Olijar. Thank you. Good morning Chairman Barr, Ranking 
Member Moore, and distinguished members of the Subcommittee. 
Thank you for inviting me here today to testify about the many 
improvements underway at the Bureau of Engraving and Printing.
    The BEP produces United States currency notes in Fort 
Worth, Texas, and downtown Washington, D.C. I am honored to 
lead BEP. I am proud to say we continue to be very successful 
at meeting the Nation's and the world's demand for currency.
    Demand for U.S. currency remains strong. There are now more 
than 42 billion notes in circulation with a value of more than 
$1.7 trillion and cash in circulation continues to grow almost 
5 percent per year. Approximately 7 billion notes have been 
ordered annually for the past decade.
    Up to two-thirds of the value of U.S. currency is held 
overseas where our currency is the world's currency. It is the 
most trusted international store value and serves as a hedge 
against uncertainties, natural disasters, and political 
turmoil.
    In the U.S. the use of cash has been resilient. While 
several small countries set a goal of going cashless, they have 
recently recognized that a cashless society presents a 
significant economic risk and neglects to serve those who do 
not have access to smartphones, computers, banks, and credit.
    I believe the 21st century warfare has a significant cyber 
component and these countries are now recognizing the risks. If 
your enemy is able to take down your electronic infrastructure 
or a natural disaster hits, there will be no way to conduct 
commerce in a cashless environment, crippling the economy.
    The FDIC estimates that 7 percent of U.S. households are 
unbanked and almost 20 percent are under-banked, as a result 
over 45 million U.S. households do not have access to the 
payment systems that are most often used in lieu of cash.
    In my 30 years at BEP, the composition of our currency has 
changed significantly with the addition of complex, covert, and 
overt security features to address domestic and international 
counterfeiting threats. It is the development of these security 
features that drives the timeline for introduction of a new 
currency series. I am happy to say that less than one one-
hundredth of 1 percent of notes in circulation are counterfeit.
    BEP works collaboratively through the Advanced Counterfeit 
Deterrent Steering Committee, with the Board of Governors of 
the Federal Reserve System, the Secret Service, and the 
Treasury Department to develop counterfeit deterrent features 
for U.S. currency.
    Potential features are subject to adversarial analysis at 
our national labs. The ACD Committee recommends security 
features and designs to the Secretary of the Treasury, who has 
final authority.
    BEP continues to implement more efficient, cost-effective, 
manufacturing processes. We develop custom machines that 
combine four manufacturing steps into one and, now, transition 
printing $1 notes from 32-subject sheets to 50-subject sheets 
and ultimately every denomination will be printed on a larger 
sheet size.
    Other strategic investments include robotic palletizers and 
new equipment that allows BEP to reclaim good notes from 
defective sheets. Together these efficiencies have saved us 
over $100 million.
    Currency production equipment has grown dramatically in 
complexity and size over the past 20 years. Moreover, the next 
family of currency will have new overt and covert security 
features which will require new production equipment to apply.
    We are expanding the Fort Worth facility to accommodate 
this equipment, it will not fit inside the current Washington, 
D.C. facilities, two obsolete, six-story, multi-wing buildings 
that have no security perimeters.
    We are seeking statutory authority to use the BEP revolving 
fund to construct a smaller, more efficient, and more secure 
production facility to replace our existing Washington 
facilities. Our legislative proposal has strong support from 
OMB. Director Mulvaney has listed it as a critical priority for 
the Administration and of course it is budget neutral. A new 
facility will cost almost $600 million less than renovating the 
existing space. It will shrink our Federal footprint by 27 
percent and lower operating costs by at least $38 million 
annually.
    The GAO (Government Accountability Office) looked at the 
Bureau's most recent facility study and, in a report released 
this year, GAO's own review and analysis strongly supports the 
Bureau's recommendation to construct a new facility, in lieu of 
renovating existing space.
    No action has been taken on facility studies over the past 
25 years and doing nothing is no longer an option without 
jeopardizing BEP's mission and the U.S. currency program. Our 
currency program returns more than $50 billion a year to the 
Treasury and is a cornerstone of the global economy.
    It is our hope that this committee will support the need 
for a smaller, more efficient facility.
    Mr. Chairman, this concludes my remarks about some of the 
initiatives of BEP and I will be happy to take questions from 
you or the committee members.
    Thank you for your time this morning.
    [The prepared statement of Mr. Olijar can be found on page 
34 of the appendix.]
    Chairman Barr. Thank you, Mr. Olijar.
    Mr. Ryder you are now recognized for 5 minutes for an 
opening statement.

                    STATEMENT OF DAVID RYDER

    Mr. Ryder. Thank you, Chairman Barr, and Ranking Member 
Moore. It is a privilege for me to be here today address your 
concerns.
    The Mint performs three primary missions. We produce coins 
at sufficient levels to meet daily needs of Commerce. We also 
manufacture numismatic and bullion products as well as 
safeguard our national assets.
    I visited and held town hall meetings in all four 
production facilities since being appointed Director about 5 
months ago.
    This workforce is well-equipped, enthusiastic, engaged, and 
committed. At any one of these facilities you will find safety 
statistics and a level of morale that rivals the very best in 
private industry.
    Our employees make use of cutting-edge technology in three 
key production phases: Design, manufacturing, and packaging. 
Robotic technology has improved production in die 
manufacturing. While a series of robotic arms boosted proof-
coin packaging from 600 to 1,800 units per hour.
    By the end of this year we should expect to produce 13.9 
billion circulating coins and more than 2.8 million numismatic 
items. The Federal Reserve demand for currency coins will 
continue to fluctuate due to economic cycles.
    To manage market uncertainty, the Mint has identified and 
executed state-of-the-art manufacturing processes. Although the 
unit cost for pennies and nickels is above face value, lean 
practices have put the Mint on track to return $250 million to 
the Treasury General Fund in Fiscal Year 2018.
    The Mint is collaborating with the Federal Reserve to 
explore cost-reduction strategies for the penny. We are also 
evaluating potential savings from alternative metals with the 
5-, 10-, and 25-cent denominations.
    Since 1982, Congress has authorized 71 commemorative 
programs that have generated more than $522 million in 
surcharges. In order to continue the success of these programs, 
I feel that it is necessary for the Mint to work closely with 
Congress during the legislative development process to identify 
Commemorative Coin programs that actually work better for our 
customers.
    We are also eager to start a dialog for a successor of the 
circulating Commemorative Quarter program before the current 
America the Beautiful Quarters program ends in 2021. Over the 
past 10 years, the Mint's numismatic customer base has declined 
from 1.2 million customers to approximately 500,000 today.
    The Mint is developing and marketing a sales strategy aimed 
at increasing awareness and promoting our products much more 
broadly to our depleting customer base that we need to take 
care of.
    The United States Mint is the world's largest manufacturer 
of gold and silver bullion coins. Beginning in 2017, demand for 
both gold and silver bullion coins worldwide slumped 
dramatically as investors apparently focused on other 
investments. In the last couple of months, demand has shown 
signs of stabilizing. We have adjusted our production levels to 
be in line with market demand.
    I believe that for the foreseeable future, coins will 
remain important instruments for settling financial 
transactions. However, with expanded cryptocurrency options on 
the horizon the importance of their seriousness, studies cannot 
be underestimated.
    The Mint is developing anti-counterfeiting measures for our 
bullion products. I have assembled a team within the Mint who 
will develop a multilevel approach including customer 
awareness, new secure product-packaging features, as well as 
product integration protections.
    As part of the alternative metals research and development, 
the Mint is actively seeking feedback from industry 
stakeholders who may be impacted in areas such as vending, 
parking meters, coin-operated laundry, amusement, public 
transportation, banking, and supermarkets.
    Helping our youth understand the role of coins can be a 
gateway for financial awareness. The Mint has developed a 
first-class website at www.usmint.gov. The site contains lesson 
plans and interactive activities that help kids understand the 
importance of saving their hard-earned money and enable them to 
take control of their own economics.
    The Mint is privileged to connect America through coins and 
medals which reflect the remarkable history, values, culture, 
and natural beauty of our Nation.
    Mr. Chairman, I thank you for your interest in the mission 
of the United States Mint. I will be happy to answer any 
questions you have. Thank you.
    [The prepared statement of Mr. Ryder can be found on page 
84 of the appendix.]
    Chairman Barr. Thank you, Mr. Ryder for your testimony.
    The Chair now recognizes himself for 5 minutes for 
questioning. Let me start with you Mr. Ryder.
    Congress has been prodding the Mint for a decade or more to 
find a less expensive way to produce circulating coins that 
could and would co-circulate with existing ones.
    Many other countries notably Canada, and the United 
Kingdom, as I pointed out in my opening statement, figured out 
how to do this seamlessly and effectively as much as 30 years 
ago. What is the current status of this effort at the Mint and 
how much taxpayer money could be saved if the Mint were to move 
to steel or some other less expensive formulation?
    Mr. Ryder. Yes, sir. Thank you for the question.
    The Mint is actively and has actively been researching 
alternate metals. We have identified one particular metal that 
we call our 80-20 composition, that it is 77 percent copper, 20 
percent nickel, and 3 percent zinc. The cost savings of that 
program would be about $4.1 million if we introduced that 
program with the nickel, dime, and the quarter.
    Another alternative metal that we are looking at is more of 
a 50-50 blend. We are in the initial stages of trying to run 
that product through its courses with the vending machine 
industry and other stakeholders.
    That particular program we believe would save over $16 
million a year in cost savings. It is probably 1-1/2 to 2 years 
away from being realized but we are endeavoring to undertake 
those two issues and try to move them out to the general 
public.
    Chairman Barr. Can you take those actions administratively 
on your own initiative without Congressional action?
    Mr. Ryder. It has to be Congressional action. We have 
submitted through our budget process legislative language that 
will allow the Secretary to make that decision. I have briefed 
the Secretary on both of these alternatives and I believe he is 
supportive.
    Chairman Barr. OK. Thank you very much.
    Mr. Olijar, the Bureau of Engraving and Printing is on 
record as seeing constant and improving demand for banknotes at 
least the next decade, and your testimony talked about the 
risks associated with electronic transactions.
    But others, including the Chicago Fed, believe that 
externalities including the improving economy and new 
technologies may work against that particularly in out-years. 
What is your projection for banknote demand in the near and 
longer-term, 2-years, 10-years, 20-years, will people still be 
using as much cash say in 2040?
    Mr. Olijar. Our projection is that cash is going to 
continue to remain a viable mechanism for payment and store 
value.
    The challenges that come with payment mechanisms are if 
there are a significant amount of them, but it really hasn't 
impacted currency demand to date.
    People have a preference for using cash. As I mentioned 
there is a large, under-banked population in this country, that 
has a significant preference and has no access to alternative 
payment mechanisms.
    Chairman Barr. Let me move on to the proposal for a new 
plant. I have looked at the GAO report and they do compliment 
you in some regards for following good practices and then they 
have some constructive suggestions for you all as you pursue 
this idea.
    When the plant in Fort Worth was opened, the land, the 
infrastructure, and the building were donated with the 
understanding that a large number of good jobs would arrive 
with the new facility.
    My question on this most recent proposal on a new facility 
is whether or not the Bureau has pursued a similar model for 
its plans to replace the D.C. facility, specifically whether or 
not you are looking at States that may be willing to save the 
Bureau money by donating the lands with the expectation that 
jobs would be located there and what is the status of that and 
if you are not pursuing that, a donation concept, why not?
    Mr. Olijar. To date we have not pursued a donation concept. 
We are open to pursuing that. The initial look we did with 
respect to the facility location was existing Federal 
facilities in the Washington, D.C. area, when we were going to 
use GSA's (General Services Administration) Exchange Authority.
    When GSA put a stop to using the Exchange Authority because 
they didn't feel that they were receiving value, we decided to 
pursue a different option.
    We are open to looking at pursuing an option like we did 
with Washington or Fort Worth facility and getting a donated 
land and facility. Key requirements for us is that we do want 
to remain on the East Coast. Primary shipments for us go to the 
East Rutherford, Federal Reserve Center. We need to be near an 
airport. But we can put our requirements out and work with GSA 
to identify anybody that would be interested in donating land 
and facility.
    Chairman Barr. Thank you. I look forward to working with 
you on ways in which we can make this work for everyone in a 
cost-effective manner.
    My time has expired and so I now yield 5 minutes to the 
Ranking Member, the gentlelady from Wisconsin, Ms. Moore.
    Ms. Moore. Thank you so much Mr. Chairman.
    Thank you, and I appreciate your comments about just the 
impracticality of going to a totally cashless society because 
people are unbanked, under-banked, children, and certainly 
merchants that maybe have pop-up vending products that really 
would not be able to handle a cashless enterprise.
    That being said, I want to just ask a little bit. I noticed 
from your testimony that you have costed out the price of 
pennies and nickels and it is one eighty-second of a cent to 
produce the penny and 6.6 cents for the nickel.
    I just want to know with what economists or marketing 
people, do you consult, with regard to the practicality of 
getting rid of either the penny and particularly the nickel?
    It is one thing to round up or down with a penny but you 
start rounding out nickels and it will add costs, so to whom do 
you interface in order to evaluate whether or not it is 
possible to get rid of a nickel in particular or a penny?
    Mr. Ryder. Sure. My primary interface is the Federal 
Reserve Bank so we have been meeting regularly on this issue, 
the penny and the nickel. We have had quite a number of 
meetings. It is my goal, I should say, our goal, to reach a 
conclusion on what to do with the penny before the end of the 
year.
    It might take quite a bit longer than that to implement 
whatever plan we do, but in regards to the penny I believe 
there are quite a number of pennies out in circulation that are 
not circulating.
    One of our goals is to try to get the general public to 
circulate more of those pennies. The banks that hold them along 
with the armored carriers that hold them, need to start 
circulating some of those pennies and not depend on brand new 
pennies that are coming out of our facilities.
    If we can really improve the circulation and get them back 
into circulation, the cost to produce pennies is going to go 
down because I would hope to see it go from 7 billion currently 
to somewhere in a manageable number of the 2 to 3 billion 
pennies a year to satisfy the Federal Reserve requirements.
    Ms. Moore. The nickel?
    Mr. Ryder. The nickel as you said, is correct. It costs 
more than a nickel to make a nickel. I don't have the authority 
to disregard the nickel. But again, we will work with the 
Federal Reserve on measures to reduce cost. Circulation is not 
as much of an issue with the nickel.
    With our alternative metals, I believe we can introduce new 
metals in the coming years that will reduce that cost 
significantly and bring it down in line with the cost to 
produce.
    Ms. Moore. The topic of the need for a new facility, 
obviously this has been costed out and the current or projected 
use of coins is factored into that so we can afford a new 
facility in your estimation?
    Mr. Olijar. Yes. I believe that we can afford.
    One of the criteria driving the need for a new facility is 
the constraints that exist in the existing facility aren't 
going to enable us to add the new security features that are 
going to be coming with the redesigned currency and maintaining 
the confidence of the currency is the essence of--
    Ms. Moore. But this is with program revenue, not any 
appropriation from Congress, you can build the facility?
    Mr. Olijar. That is correct. There would be no 
appropriation from Congress. We would include it in the billing 
rates for the Federal Reserve for our currency.
    Ms. Moore. OK. Thank you.
    Mr. Chairman, I will yield back my time.
    Chairman Barr. The gentlelady yields back.
    The Chair now recognizes the Vice Chairman of the 
subcommittee, the gentleman from Texas, Mr. Williams for 5 
minutes.
    Mr. Williams. Thank you, Mr. Chairman for holding this 
important hearing on the Future of Money in the United States.
    Our economy is booming and thankfully Americans are 
consuming, spending, and saving more than ever before. While we 
encourage and work to foster this historic growth we must also 
scrutinize our current systems, keep what is working, reform 
what is not.
    This subcommittee has focused on issues that are important 
to the American people and most importantly paid close 
attention to how the Federal Government spends the taxpayer's 
money. It is my hope that this morning we can have a discussion 
on the U.S. Mint and Bureau of Engraving and Printing, how they 
are doing, what are the good things they are doing, and how we 
can improve upon what they are doing and how we can establish 
and support best practices for the foreseeable future.
    I look forward to this hearing and I appreciate our 
witnesses being here and in full disclosure, I am from Fort 
Worth, Texas.
    First question, Director Olijar, I am sure many people 
followed the proposal, removing Andrew Jackson or Alexander 
Hamilton from Federal Reserve notes. Where does this issue 
stand?
    Mr. Olijar. The Secretary of the Treasury has final design 
authority with respect to United States currency.
    At this time, we are focused on the next denominations to 
be redesigned, which are the 10 and the 50.
    Mr. Williams. OK. It seems though any decision on this 
subject would be controversial but a decision probably has to 
be made as part of the banknote redesign schedule so what is 
the decision or what is the timeline, that you think we will 
have?
    Mr. Olijar. Our estimate is that we need a decision with 
respect to the $20 note in 2021 to enable us to be in 
production and introduce a redesigned currency by 2026.
    Mr. Williams. OK. Another question, the United States 
dollar is particularly strong right now and two-thirds of U.S. 
$100 notes are thought to be circulating overseas, so what is 
the state of counterfeiting of Federal Reserve notes these 
days?
    Mr. Olijar. As I mentioned, counterfeiting today is less 
than one one-hundredth of a percent of the notes that are in 
circulation. That said, the significant threat that we face in 
counterfeiting is the casual counterfeiter has emerged as the 
primary focus. Those are the folks that are using their 
personal computer and inkjet printer to scan and print a note.
    That is why we are redesigning the currency and coming up 
with state-of-the-art security features to thwart that.
    Mr. Williams. Will you say is that problem increasing, 
decreasing, stable?
    Mr. Olijar. Overall counterfeiting remains relatively 
stable. But it used to be, that it was large printing shops, it 
has now become the small individual and a lot more of them are 
doing it.
    Mr. Williams. You just touched on what I was going to ask 
you, so is counterfeit produced in specific places or passed 
more in specific places?
    Mr. Olijar. Counterfeiters typically target the larger 
retailers that don't have automated equipment; individual 
cashiers; small businesses where people aren't as knowledgeable 
about the currency and don't know the security features to look 
for in what is there today.
    Mr. Williams. OK. Finally, is the Secret Service still 
emphasizing an anti-counterfeiting mission the way it once did?
    Mr. Olijar. The Secret Service, BEP, the Department of 
Treasury, all work very collaboratively to keep the Nation's 
currency secure.
    Yes, they are aggressively helping us fight counterfeiting, 
especially in the international markets where you do see the 
larger counterfeiters.
    Mr. Williams. And also, I will just make a statement 
because we have touched on the Fort Worth model, if that is 
what you want to call it, for future expansion, is certainly 
the way to go. It works does it not?
    Mr. Olijar. Yes, it works very well. I would love to follow 
that model and we could actually make some improvements on that 
model. That was a facility opened--
    Mr. Williams. Maybe bringing more business to Fort Worth?
    Mr. Olijar. Yes.
    Mr. Williams. Might be an improvement.
    Mr. Olijar. We are doing a significant expansion in Fort 
Worth already to accommodate the new equipment.
    Mr. Williams. OK.
    And just in closing, Director Ryder, I want to thank you 
for the experience you bring with the Mint and your views and 
so forth.
    Tell me one more time, before my time is up, what does it 
cost to make a penny?
    Mr. Ryder. Right now, it is about two pennies.
    Mr. Williams. But the nickel?
    Mr. Ryder. About 6.3.
    Mr. Williams. Yes. Sounds like you are in the car business.
    I want to thank you all for being here, appreciate your 
involvement.
    I yield my time back, Mr. Chairman.
    Chairman Barr. The gentleman yields back.
    The Chair now recognizes the gentleman from California, Mr. 
Sherman.
    Mr. Sherman. Mr. Olijar, impressive results on the Virginia 
CPA exam.
    Mr. Olijar. Thank you.
    Mr. Sherman. We have other countries in the same business, 
countries like ours, like Japan, the E.U., Canada, Great 
Britain, what is their smallest unit of paper money in those 
countries?
    Mr. Olijar. I am not sure but it is generally above a 
dollar.
    Mr. Sherman. I am used to $2 to $5 because they have 
discovered that if you don't have a dollar bill, people will 
use the dollar coin and they will save a lot of the money that 
we are talking about here.
    Mr. Ryder, I know you are going to be coming up with a 
report on the penny by the end of the year, my guess is that 
you won't do it but I am going to suggest that you simply 
abolish the penny.
    It is not currency, it is litter. Literally if a police 
officer saw me throw pennies on the ground, I would get a 
ticket for littering and if I tried to pay that ticket in 
pennies, the judge would be very upset.
    There will be the issue that somehow when transactions are 
rounded, that that would be inflationary or somehow the 
merchant would benefit.
    If you buy something for $1.98 in a State with a 7 percent 
sales tax, you are already rounding to the nearest penny, you 
actually owe the merchant $2.1186 and it gets rounded to $2.12 
so you are rounding up. If you buy four of those items instead 
then with sales tax you round down.
    The penny has been our lowest unit of currency since 1857, 
since Lincoln, now he would not throw pennies on the ground and 
call it litter because back then a penny was worth more than a 
dollar is today, I believe, certainly well more than 50 cents.
    Are you considering abolishing the penny?
    Mr. Ryder. No. sir.
    Mr. Sherman. Would you? Even after that impassioned 
rhetoric from the gentleman from California?
    Mr. Ryder. I actually just this morning off the Metro, 
picked up a penny. I always seem to pick pennies up wherever I 
go but it is not my decision to abolish the penny.
    I will comply with regulations if and when, but right now 
it doesn't seem that the American population wants to get rid 
of the penny. If we had to round, the inclination will be to 
round up.
    Mr. Sherman. No. The rules--we round every transaction, in 
every State with a sales tax, and the computers and before 
that, little paper charts that the agency I used to run 
distributed.
    We round up or we round down based upon whether it is over 
0.5 or under 0.5.
    We can certainly mandate by law that if it was exactly half 
a penny you round down.
    Mr. Ryder. My personal opinion I think rounding affects the 
people that least can afford it and--
    Mr. Sherman. But every person who can least afford it has 
their transactions rounded, every time they buy anything, in 
any State with a sales tax.
    Mr. Ryder. True.
    Mr. Sherman. OK.
    Let us see. I will ask your colleague there, what steps you 
are taking in designing the currency particularly the $5 bill, 
the $1 bill but all currency to make sure that the changes you 
make are consistent with vending machines that read currency?
    Mr. Olijar. We are prohibited by statute from redesigning 
the $1 note so at this point in time we have no plans for a 
redesign on that.
    With respect to the $5 note, we have a very active 
interaction with the BEM, the Banknote Equipment Manufacturing 
community. We share proposed designs with them. We give them at 
least 18 months to modify their equipment. We seek their 
feedback on security features that we add specifically for the 
Banknote Equipment Manufacturers to use because--
    Mr. Sherman. This is the same equipment that is used in the 
vending machines as well?
    Mr. Olijar. Correct.
    Mr. Sherman. OK. I would point out that in your testimony 
you folks are talking about saving $4 million, saving $16 
million and a million dollars is a lot of money, it sounds like 
a lot of money but compared to the cost in this economy of 
having people carry money and coins, of having machines count 
money, of having vending machines either work or not work, just 
the psychological cost of having to hire a psychiatrist to talk 
to you about the incredible anger that you have when the 
machines won't give you your potato chips. Those costs dwarf 
the $4 million and the $16 million, I would hope.
    Is it your mandate to come up with the best decisions for 
society or just whatever cost your agency the least money?
    Mr. Olijar. We focus on society. The cost of the electronic 
transaction and electronic fraud is much more significant than 
the cost of counterfeiting or the cost borne by businesses of 
today.
    Mr. Sherman. Well, yes.
    Chairman Barr. The gentleman's time has expired.
    The Chair now recognizes the Chairman of the Capital 
Markets Subcommittee, Mr. Huizenga.
    Mr. Huizenga. Thank you, Mr. Chairman. I appreciate the 
opportunity to welcome you here.
    Just while we are on this subject that Mr. Sherman was just 
talking about, how much of a consideration is really given to 
the equipment manufacturers, vendors, and the folks that 
utilize these, whether it is coins or paper money, on a daily 
basis? How much weight is given to their opinions on content as 
they need to go in and maybe change how a machine would read a 
coin or read a dollar?
    Talk a little bit about that process if you would?
    Mr. Olijar. With respect to currency, there are a 
significant number of conferences where we have an opportunity 
to sit down with the equipment vendors. One of the things that 
they share with us is the particular version of counterfeit 
notes that they see and how their machines are being reverse-
engineered so that we can work collaboratively with them to 
enhance the security of our designs.
    We have a very significant outreach to them. They are one 
of the front line of defenses in fighting counterfeit so we 
want to work collaboratively.
    Mr. Huizenga. Mr. Ryder?
    Mr. Ryder. With regard to the Mint, we rely heavily on our 
vendors and machine manufacturers. Behind me there are two 
gentlemen from Coinstar that have about 17,000 machines in the 
industry today that count coins and whatnot, in supermarkets.
    We also work with many of our other vendors when we are 
doing metal evaluation of our different products to ensure that 
the machines work well with our products, they cohabitate well. 
We depend heavily on those vendors.
    Mr. Huizenga. That is a pretty dynamic relationship?
    Mr. Ryder. Yes.
    Mr. Huizenga. I know that has been cited, however, in the 
past, reluctance to move from a paper dollar or $5 banknote to 
those coins, changing those systems, but it sounds like those 
systems are continually reviewed and in demand from the 
manufacturing side.
    I am going to move on to a letter, this is a theme, it is 
not particularly new, but this is a letter that I had sent in 
September 2016 to a Comptroller generally, a U.S. GAO and when 
I had the privilege of chairing this particular subcommittee, 
talking about the building and the desire at the time to move 
the Mint.
    One of the things I was really quite curious about though 
was the BEP had foregone at least $200 million in maintenance 
on its current D.C. facility and it seems quite a big number 
and I believe it begs the question of how well all BEP 
facilities or any new one would be cared for. If you could 
address that issue?
    Then I am curious how did it occur? How did we get $200 
million behind? Was BEP underpricing their services, their 
printing fee, charges to the Federal Reserve or was the Federal 
Reserve refusing some of those charges? How did we get $200 
million behind in maintenance?
    Mr. Olijar. A significant amount of that maintenance 
actually goes back to being deferred into the late 1990's when 
I was the CFO of the Bureau of Engraving and Printing.
    As I have mentioned we have done three facility studies and 
prior to making, I will say, significant infrastructure 
investments we had the hope that we would be able to move 
forward on a replacement facility rather than continuing to put 
money into a facility that would not provide us with the 
operational efficiencies that a new one would give us so we 
deferred maintenance.
    We have done three facility studies in the past 25 years. 
Our hope is that we can get a smaller more efficient 
manufacturing facility. The deferred maintenance that we are 
talking about exists primarily in Washington, D.C. We have not 
deferred maintenance in the Fort Worth modern facility that we 
have today.
    Mr. Huizenga. Yes. Real quickly, my time is running out.
    Are we really going to need two factories for banknotes in 
25 years?
    Mr. Olijar. I believe it is in the Nation's interest, as 
does the Federal Reserve and the Department of Treasury to have 
two manufacturing facilities for what is the world's currency 
today. Putting all of our eggs in one basket, presents a 
significant security risk.
    Mr. Huizenga. Do you have some third-party studies or 
anything that could demonstrate that?
    Mr. Olijar. With respect to security?
    Mr. Huizenga. Has anybody looked at what that means outside 
of just internally, both the need for the sheets, the security 
situation, the entire package of why a second facility would be 
necessary?
    Mr. Olijar. GAO did a comprehensive review of our most 
recent study that was done and they support the need for a more 
efficient manufacturing facility, in lieu of--
    Mr. Huizenga. With real indulgence are people going to be 
able to go tour it?
    That is one of the things that we hear from constituents 
all the times. They want to go and see their money being made 
and I am curious if that is part of that plan?
    Mr. Olijar. We haven't gotten that far. There is a great 
interest in our citizens to see the printing of the Nation's 
currency and I would hope to entertain them there as well.
    Chairman Barr. The gentleman's time has expired.
    The Chairman now recognizes the gentleman from Texas, Mr. 
Green.
    Mr. Green. Thank you, Mr. Chairman. I thank the Ranking 
Member and the witnesses for appearing.
    I am curious about digital currency and I am curious about 
it not in the sense of Bitcoin but in the sense of dollars as 
we know them and coins as we know them. It seems to me that 
there is a future wherein hard currency and coins won't find as 
much prevalence as we see today.
    Russia is currently looking at a bit currency of a sort, 
they are calling it the CryptoRuble, I believe. China is doing 
a similar thing. There seems to be some advantages in digital 
currency. You have better efficiency. You have immutability. 
You have transparency. You have portability.
    Where are we in terms of looking at the future of currency 
in the sense of whether there will be a need for the type of 
tangible currency that we currently have a lot of need for it 
seems?
    Mr. Olijar. People have a preference to a tangible 
currency.
    I do not believe that there is going to be a world in which 
we won't have something that we can hold, touch, and transact.
    The challenge that faces a digital currency as I mentioned 
is that there is a lot of electronic-related fraud going on and 
that the loss that accumulates related to that type of fraud is 
much more significant than that encountered from 
counterfeiting.
    Mr. Ryder. My opinion is there is probably a place for it 
but there is a larger place in society for actual currency that 
you hold and transact with.
    Crypto-type currencies are much more speculative and risky 
but you are talking to somebody whose parents raised a pretty 
conservative investor so I am going to stick with currency.
    Mr. Green. You do understand that I am not talking about 
Bitcoin. I am talking about a crypto dollar. I am talking about 
persons who are going to metamorphose from going to the vending 
machine and utilizing a credit card to make a purchase as 
opposed to a coin. I am talking about people who want to 
traverse the country and they want to take $10,000 with them 
but they don't want to take it in dollars for fear of many 
things that can happen along the way.
    Why would we not see a world where these people are going 
to at some point, not everybody will have $10,000 but everybody 
will have the opportunity to go to a vending machine and there 
are other types of machines now that have been converted such 
that they can use credit cards.
    I know that there will be fraud, in anything that we do we 
have fraud. It is just a fact of life, let us try to minimize 
it.
    Are you saying that there will be more fraud with the 
electronic currency than we have with tangible currency?
    Mr. Olijar. I believe that there already is more fraud with 
the electronic payment mechanisms than there is with currency 
today, so I would think that would be likely to continue in 
digital currency.
    In addition, there is a very large part of the population 
that likes the anonymity that comes from using currency in 
their transactions. There is a government fear. When you take 
Russia issuing a currency, do you really want to hold that as a 
stored value?
    Mr. Green. No. I don't.
    As a matter of fact, nor do I want to hold China but what I 
do want to do is look to the future and sometimes others can 
get to the future ahead of us. We ought not to conclude that 
because we have other things that we find that we don't like 
about Russia, that they may not be ahead of us on some other 
things. I can think of a few things that they have done ahead 
of us that we try to catch up with.
    But let me just leave you with this. I am just concerned 
about our not staking out at least a vision, at least start to 
look at where this may be going without us. I don't care to 
have people know what I have in my bank account. There probably 
would be an easier way to find out but I do want to make sure 
that we don't find ourselves at the tail end of a future that 
is going to envelop currency.
    Thank you. I yield back.
    Chairman Barr. The gentleman yields back.
    The Chair now recognizes the gentleman from North Carolina, 
Mr. Pittenger.
    Mr. Pittenger. Thank you, Mr. Chairman. Thank each of you 
for being with us today.
    According to a report by the Federal Reserve of San 
Francisco, cash purchases amount to only 14 percent of the 
total value of consumer transactions with the average 
transaction being only $21. With this in mind I just want to 
ask you, is it necessary to continue to produce cash at the 
rates we have seen over the past decade or so?
    Mr. Olijar. We have seen no decrease in demand for cash. As 
I mentioned, it has two uses--
    Mr. Pittenger. Let us say and excuse me but maybe 50, 60 
years ago it was close to 100 percent and then we began 
utilizing more credit cards. Now it is only down to 14 percent.
    Mr. Olijar. At the same time the overall number of 
transactions has increased significantly and overall cash 
demand as I have mentioned, over the past 10 years, has 
remained relatively stable at 7 billion notes. We don't 
perceive that other payment mechanisms are going to drive that 
down at this point in time.
    The Apple Pay, the Bitcoin have taken share from checks. 
Checks have been the primary payment mechanisms that as has 
suffered a significant decrease in volume.
    Mr. Pittenger. OK.
    Some scholars propose eliminating higher value notes 
because they are heavy-use in tax evasion, corruption, and even 
terror financing. With this in mind the Europeans had a $500 
note they call the ``bin Laden note'' because of it's ease of 
use by terror groups.
    I would say that no other transaction provides the same 
level of anonymity. Understanding this, will it be worth 
studying a gradual phase-out of our large denominations?
    Mr. Olijar. The largest denomination that we produce today 
is the $100 bill.
    Mr. Pittenger. I understand that.
    Mr. Olijar. We do have the authority to print 500-, 1,000- 
or 10,000-notes. I don't think that we could look at doing 
that. It would have a very adverse impact on Commerce, the $100 
note is increasingly used in transactions.
    The higher denomination notes when we stopped printing them 
in 1969, the $100 note today is worth $17 compared to the 
hundred it was in 1969.
    As the level of prices have gone up, the demand and usage 
of the $100 note has increased significantly in Commerce and it 
serves as a stored value internationally.
    Mr. Pittenger. Mr. Ryder, you wish to comment on that?
    Mr. Ryder. The Mint, in 2016, produced a little over 16 
billion coins. It reduced in 2017 to about 14 billion and we 
are on track to produce over 13 billion coins this year so it 
is hovering in that area. The Federal Reserve has been ordering 
that for the last 10 years.
    Mr. Pittenger. Does the Secret Service and Customs have the 
tools necessary to identify counterfeit coins and then 
prosecute those counter-felons?
    Mr. Ryder. Yes. The U.S. Mint is taking that issue very 
seriously.
    When I joined the Mint, I created a taskforce of some of 
the brightest men and women in our facility where we are 
addressing that issue on a weekly basis.
    The Gold bullion coming out of China that is counterfeit is 
a unique problem from a technology point of view as they are 
replacing the gold with tungsten. Tungsten has about the same 
weight as gold, the density and trying to detect that can be 
difficult but we are looking at technologies to address that 
issue both from a coining point of view within the metal itself 
or on the metal as well as packaging.
    Recently we have undertaken a new effort with consumer 
awareness on educating our consumers about what to look for.
    Mr. Pittenger. Thank you. Let me ask you one other 
question, if I could.
    I am told that some countries including China may have 
truckloads of perhaps counterfeit coins that they maybe would 
engage us with a mint buyback program.
    Are we prepared to ensure that this buyback program that we 
have is secure?
    Mr. Ryder. Yes, sir. We are working diligently with the 
Office of Inspector General and the Secret Service, to address 
those issues. I believe we are on top of it and can take care 
of that issue when it comes up.
    Mr. Pittenger. Thank you very much. My time has expired.
    Chairman Barr. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Foster.
    Mr. Foster. Thank you, Mr. Chairman.
    I guess I should start out by saying that, as I guess the 
most senior representative from Illinois, if we are looking at 
a future where you are thinking about issuing digital 
currencies, I think I can speak for the entire delegation from 
Illinois, that that currency must be named for Abraham Lincoln. 
Just wanted to get on the record on that.
    Second, as I guess the only PhD physicists in Congress, if 
you are looking at methods for distinguishing tungsten from 
gold, you could look at low-frequency or medium-range gammas 
and x-rays which have a very, very strong dependence on atomic 
number and then well, probably with a pretty simple method, 
generate even a hand-held way of telling the difference there.
    Now back to digital currencies. I was wondering what you 
can learn, or maybe you already studied this, if you look at 
countries where they have made the transition to having most of 
the consumer payments be it cashless, payment by cellphone. 
That I presume is accompanied by a drop in low denomination 
bills and coins and perhaps a persistence of the higher 
denominations as they are used for other purposes.
    Have you looked at the adoption curves in those countries 
that have made this rapid transition and factored that into 
your planning?
    Mr. Olijar. We have. We are in constant contact with other 
countries and the mechanisms that they are using to drive 
efficiencies in the economy. They have not seen a significant 
increase in demand for the higher denomination notes as a 
result of that.
    The countries that have done the dollarization are very 
small, homogeneous countries, mostly Scandinavian countries 
going toward cashless but as I mentioned they are actually 
moving backward now and trying to make sure that they are 
serving the population.
    Mr. Foster. The total demand, particularly low 
denominations, is not affected when the consumer economy goes 
cashless, is that what they observe?
    Mr. Olijar. The demand for--it is the demand for all notes.
    Mr. Foster. I was talking about the shift. You may actually 
see a shift, my guess is that the low denominations would 
become just stored on your cellphone and it is the higher 
denominations where you want something you can hold in your 
hand and stuff under the mattress or whatever, do you see 
anything, have you looked at the difference in the distribution 
of value that consumers are asking for?
    Mr. Olijar. It is fairly much across the board when you are 
going cashless.
    Mr. Foster. That is interesting. OK.
    Is there a general report? If you could, as a response for 
the record, if there is some review article of what the 
response is in different countries I would be very interested? 
Don't do a big internal study on this but if you can pretty 
quickly come up with some report of what the experiences in 
countries that are ahead of the curve of the U.S. on cashless 
economies, it would do everyone some good to see what is coming 
and look around the corner here a little bit.
    Mr. Olijar. Absolutely. We can get you that.
    Mr. Foster. Thank you. I appreciate it. I will yield back.
    Chairman Barr. The gentleman yield's back. The Chair now 
recognizes the gentleman from Minnesota, Mr. Emmer.
    Mr. Emmer. I thank the Chair and the gentlemen for being 
here today.
    The United States dollar is particularly strong right now 
and two-thirds of U.S. $100 notes are thought to be circulating 
overseas. What is the state of counterfeiting of Federal 
Reserve notes these days?
    Mr. Olijar. The level of counterfeiting remains relatively 
stable. It is less than one one-hundredth of 1 percent.
    In 2011, we unveiled a redesigned $100 note with a Blue 3-D 
Security Ribbon. It has been extremely successful in the 
marketplace. To date, it has not been successfully replicated 
by the counterfeiters. They are continuing to counterfeit older 
designs.
    Mr. Emmer. I am sorry, they are, I missed it?
    Mr. Olijar. The counterfeiting is focused on older design 
notes and we are gradually taking those out of circulation as 
quickly as we can.
    Mr. Emmer. In general, has the counterfeiting been stable 
since 2011 or just stable on $100 notes?
    Mr. Olijar. Overall counterfeiting has been stable. $100 
notes have gone down. Counterfeiters have shifted towards the 
50, which is why it is now the second note to be redesigned.
    Mr. Emmer. Is counterfeit currency produced in specific 
places or passed more in certain locations?
    Mr. Olijar. In the United States, 85 percent of the 
counterfeits are done with a PC or an inkjet printer and a 
scanner so there are literally thousands of them and 
unfortunately across the country where people are generating 
very small volumes of counterfeit.
    Outside the country there are some locations that are hot-
beds of counterfeiting.
    Mr. Emmer. For instance?
    Mr. Olijar. For instance, Peru. The Secret Service has 
opened an office there and they are working very closely with 
the Peruvian government to combat that.
    Mr. Emmer. Are there others or is Peru the outright winner?
    Mr. Olijar. There are some others that I could share with 
you. I would prefer not to do it publicly.
    Mr. Emmer. OK.
    Is the Secret Service still emphasizing the anti-
counterfeiting mission the way it once did?
    Mr. Olijar. As I mentioned, yes. We are working very 
collaboratively with the Secret Service and the Federal Reserve 
to keep the Nation's currency secure.
    Mr. Emmer. All right.
    Mr. Ryder, following a similar line of questioning, in an 
August 14 interview you are quoted as saying that you have, 
``set up an internal steering committee at the Mint,'' which is 
what you referred to a little bit earlier, that is addressing 
counterfeiting issues.
    Can you give us some more information about the specific 
mission of this steering committee, who sits on the committee, 
who runs it and what do you expect the committee to accomplish 
within the next year? Earlier you were referencing gold bullion 
and other things but just counterfeiting in general?
    Mr. Ryder. Yes, sir. As I said we take counterfeiting 
pretty seriously.
    I spent 25 years in that industry both in the currency as 
well as the coinage side of the business. Our team at the Mint 
is mostly operational-type individuals who have knowledge of 
the makeup of our products.
    We meet twice a week or twice a month usually in 
Philadelphia but we have a pretty good handle on the problem. 
We are addressing those problems properly with the Secret 
Service, the Office of Inspector General, on the bullion side 
as well as the circulating side.
    Mr. Emmer. Who sits on it?
    Mr. Ryder. I am sorry?
    Mr. Emmer. Who sits, so how many people do you have on this 
committee?
    Mr. Ryder. About 12 members on our steering committee, 
mostly members of the Mint.
    We are getting ready to have a Vendor Day at the Mint where 
any vendor who has an anti-counterfeiting technology can come 
to the Mint, present to us and it is our hope to select the 
best of the best that particularly pertain to both our 
packaging and our certificates of authenticity, as well as 
entertaining some pretty smart people with regard to the 
physics of what we might be able to do within the metal itself.
    Mr. Emmer. Do you run this committee personally or you have 
somebody else running it?
    Mr. Ryder. I run it.
    Mr. Emmer. In the last few seconds I have left for both of 
you, are there additional authorities that Congress should 
provide to aid your efforts to combat counterfeiting?
    Mr. Ryder. You are doing a great job as it--
    Mr. Emmer. We don't hear that every day.
    Mr. Ryder. No. But as I have had several letters in this 
regard, it keeps us on our toes. If you find a problem out 
there in your districts, any of you, it is good that you let us 
know either verbally or in writing and we will address it.
    Mr. Olijar. Currency is a counterfeiting game and we 
greatly appreciate your support in the anti-counterfeiting 
mission we have.
    Mr. Emmer. Thank you both.
    I see my time has expired.
    Chairman Barr. The gentleman's time has expired.
    The Chair now recognizes the gentleman from West Virginia, 
Mr. Mooney.
    Mr. Mooney. Thank you, Mr. Chairman.
    It is good follow up to my colleague's comments about 
counterfeiting.
    Your predecessors have not incorporated anti-counterfeiting 
technologies into U.S. coins, minted of precious metals. My 
efforts to press your agency on this inaction has been met with 
responses suggesting, you have not had that many complaints or 
see a large problem.
    But in my meetings with law enforcement, I know the Secret 
Service and U.S. Customs and Border Enforcement have been 
dealing with many cases and would certainly like more 
assistance from the U.S. Mint.
    Other than providing ongoing cooperation with 
investigations, one thing the Mint can do is adopt the types of 
anti-counterfeiting technologies that other sovereign mints 
have adopted long ago.
    I have had a demonstration of one of these in my office. 
This technology is called a ``PAMP VeriScan'' and it seems to 
work great, so when will the U.S. begin to address these 
problems and implement these types of security standards?
    Mr. Ryder. I believe we are adjusting to them now, I am 
very active in this area.
    Finding a solution for the bullion problem is an 
interesting problem. I have talked recently to a very bright 
physicist who has some very interesting ideas about how to 
resolve that at a relatively inexpensive cost but from a 
technology point of view, it is very robust.
    Our team at the Mint is addressing many of the issues that 
you are speaking about and we will continue to do so.
    Mr. Mooney. OK. I look forward to working with you. I 
appreciate your comments earlier that if we hear problems we 
pass it on to you and so that is what I am doing.
    It is important we do that. It is in the Constitution that 
we have the right to do that, the duty to do that.
    Mr. Ryder. Yes.
    Mr. Mooney. Unlike a lot of things government does, that is 
actually in the Constitution and I would just comment as an 
aside to my colleagues on the other side of the aisle, who are 
complaining about the value of the penny, it is the 
inflationary practices of the Fed that we should stand up to 
because those inflation costs have devalued the penny greatly 
over the years.
    The Fed's goal is 2 percent. It is been higher than that 
many years so, yes, the penny is worth a lot less and my 
constituents, many of whom save and are the ones that you 
mentioned, Director Olijar, about folks that are not highly 
banked and I are just saving their pennies and their dollars, 
they are the ones who were hurt by those inflationary prices so 
maybe we should keep that in mind as we complain about the 
value of the penny, to my colleagues on their side of the 
aisle.
    Another question however is, the IRS currently classifies 
these precious metals and coins as collectibles like Beanie 
Babies and baseball cards and then requires taxpayers to report 
capital gains, which are taxed at a discriminatory high 
collectibles rate of 28 percent.
    My view, which is backed up by language in the U.S. 
Constitution, is that gold and silver coins are money and 
indeed these American Eagle coins are legal tender.
    If they are indeed U.S. money, it seems there should be no 
taxes on them at all so why are we taxing these coins as 
collectibles?
    Mr. Ryder. That is a very good question. It would help our 
investor community, collector community if it weren't taxed.
    Obviously, it is not my decision, but it is something that 
we deal with, but again there is not much I can do about it.
    Mr. Mooney. OK. I see my colleague Frank Lucas is here so 
we have been working on this issue and appreciate seeing you 
and I am glad you are here to ask some questions.
    I will ask you one more before I finish here. I understand 
from my meetings with law enforcement that one hurdle in 
getting counterfeit prosecutions pursued is the statutory 
threshold of the $10,000 in value.
    Gold Eagles have a face value of $50; however, as a direct 
result of the Federal Reserve's inflationary policies over many 
decades, the market value of the gold contained in a single 
one-ounce Gold Eagle is now worth about $1,200 so $10,000 in 
face value of these coins is worth about $240,000 at current 
gold prices.
    Shouldn't the statutory threshold be modified so that 
prosecutors can look at actual values involved in these frauds 
and therefore pursue more cases and leads?
    Mr. Ryder. It is something probably they should take a look 
at.
    Mr. Mooney. OK. Thank you.
    Mr. Chairman I will go ahead and yield back the balance of 
my time.
    Chairman Barr. The gentleman yields back.
    The Chair now recognizes the gentleman from Arkansas, Mr. 
Hill.
    Mr. Hill. I thank the Chairman. Thank you for conducting 
this hearing. It is good to have our leaders from the Mint, the 
Bureau of Engraving with us today.
    First of all, I know you have addressed this but I was not 
in the room, I would like to talk a little bit about the 
proposed facility you are considering in the Bureau of 
Engraving here in the Beltway.
    Is there no way to expand the facility in Fort Worth to 
increase capacity and thereby not build another facility here? 
That is question one.
    Question two is, are you using the same approach which is 
donated land and treating it in the same manner you did when 
you built the facility in Fort Worth back in 1986?
    Then, third I would say, what cost-benefit analysis it 
requires?
    I understand the part about expensive property here in 
Washington, D.C., higher and better use, old facility but I am 
real interested in this issue of could you just do it by 
expanding in Fort Worth or are you required from a safety point 
of view to have two production facilities?
    Thank you very much.
    Mr. Olijar. That is the primary driver for two facilities, 
it is in the Nation's and the world's interest that we have two 
manufacturing facilities. Putting all of our eggs in one basket 
presents a significantly high risk. That is one of the reasons 
that the Fort Worth facility was constructed so that we had two 
manufacturing facilities.
    When the facility in Washington, D.C. faced a threat from 
the airliner that went down on the 14th Street Bridge, we had 
to look at that as a very significant economic threat to the 
country. I want to make sure that we can meet the Nation's and 
the world's demand for our currency.
    Mr. Hill. Who supervises construction on a Treasury project 
like that?
    Mr. Olijar. We don't have the expertise internally to do 
that type of a construction. We would work with either GSA or 
the Army Corps of Engineers to supervise the production. It is 
well beyond our capabilities.
    Mr. Hill. Thank you.
    For the facility location here, are you going to use the 
same approach you did in Texas on considering an economic 
advantage to Maryland or Virginia and ask for donated land and 
State support for that construction?
    Mr. Olijar. We are considering going out and asking to see 
what type of land and facility would be provided to us.
    Mr. Hill. Thank you. I appreciate that.
    I noted in the preparation for the hearing, there was some 
interest that the Bureau might propose conducting your high-
quality engraving, printing for non-Federal customers. Can you 
tell me about that?
    Mr. Olijar. Yes, yes. A coalition of the States has 
approached us to get secure documents, I think birth 
certificates done. There is no capacity and capability to do 
that in the United States today. The States have reached out to 
Canada to get their secure documents printed. We have the 
capability. We could do it without having any impact on our 
core mission and would incorporate the necessary security 
features that they are looking for.
    Mr. Hill. I presume that is because as the bond and stock 
market has gone electronic, we have no private engraver, 
printers left in the United States?
    Mr. Olijar. That is correct. No large scale.
    Mr. Hill. Thank you very much.
    Mr. Chairman I appreciate the time and I yield back the 
balance.
    Chairman Barr. The Chair now recognizes the gentleman from 
Ohio, Mr. Davidson.
    Mr. Davidson. Thank you, Chairman. Thank you both for your 
time here today and the work you do on behalf of our country.
    I am curious if we look at the problem Director Ryder, with 
the counterfeit bullion coins coming into the country, do 
Secret Service and Customs have adequate tools to detect the 
counterfeits? Do they have adequate legal authorities? Are 
there changes that need to be made and if so what might we do 
to address that?
    Mr. Ryder. I don't think that Customs, based on the problem 
that we have, has the right tools because I don't think the 
tools exist to easily authenticate the difference between an 
authentic bullion coin or one that has been incorporated with 
tungsten particularly.
    If it is simply a counterfeit coin that is made of gold, 
they have the capabilities of addressing that issue but the 
tungsten issue is an interesting problem and it is difficult to 
manufacture an inexpensive detector, when I say inexpensive, 
something less than say $5,000 that can do the job.
    We currently have quite a number of those types of devices 
in our facilities and they do not detect the tungsten without 
destructive testing.
    Mr. Davidson. Have you put out an RFI? DARPA, for example, 
funds defense projects when, gee, I wish there was a technology 
solution to this and they solicit proposals. Have you solicited 
proposals from the commercial sector for innovators whether 
they are PhD candidates or existing companies to try to solve 
this problem?
    Mr. Ryder. We have. I have sat down with a number of 
companies to talk to them. As I said earlier, we are going to 
have a Vendor Day to allow anybody who might have something, 
come and talk to us.
    I have talked to NASA particularly with some of their 
scientists about some of the things they might be doing but it 
is something that is ongoing, is something that we have to 
address.
    Mr. Davidson. Thank you. And, one of the other challenges 
of course, when you have cash or coins, is they do store value, 
they are the legal tender of the United States of America but 
sometimes people lose them. When you lose them they are gone or 
cash and coins, are they used for illicit finance?
    Mr. Ryder. In a number of cases, yes, they are.
    Mr. Davidson. Do people launder money--
    Mr. Ryder. Absolutely.
    Mr. Davidson. With cash? OK.
    Many of these same objections are raised about 
cryptocurrencies or crypto assets of various types and as we 
speak about those, how much cash could you store inside this 
phone case?
    Mr. Ryder. Quite a bit.
    Mr. Davidson. If it were digitized, you could store quite a 
lot but in a similar package, you really would not be able to 
carry much value. If you had gold coins or melted this and 
turned it into a piece of gold but that is not what we print in 
the Mint, we print currency and coins, paper currency.
    There is a demand in the future for crypto out there and 
the question is, will there be intermediaries like currently, 
Visa and MasterCard, or cryptocurrencies, whether it is Bitcoin 
or one of the numerous other coins that are out there, seeking 
to become currencies?
    Recent reports have cited that demand for investor-grade 
bullion coins has decreased and perhaps some of that decrease 
is accounted for due to demand for Bitcoin or Ether or XRP 
because they are an emerging asset class and present 
opportunities for investor to store values.
    Do you see a correlation between the rise in demand for 
these cryptocurrencies and decline for bullion?
    Mr. Ryder. There are two different customer bases, two 
different people who have two different agendas.
    The bullion products have been selling quite a bit in 
reduced numbers in the last couple of years mostly because 
investors have taken on different types of investments.
    We have seen a rise in the last 2 or 3 months where we have 
seen a slight increase from an investment point of view.
    But as I said, I believe the crypto-type investments are 
built for specific investors who have specific investment 
goals.
    Mr. Davidson. OK. My time has expired.
    I look forward to following up with you on additional 
items.
    I yield Chairman.
    Chairman Barr. Thank you.
    The gentleman yields back.
    The Chair recognizes the gentlelady from New York, Ms. 
Tenney.
    Ms. Tenney. Thank you, Chairman Barr.
    I really appreciate the panel for being here today.
    Obviously the jurisdiction of this committee is to give 
oversight over the institutions that produce our currency and 
aid in facilitating our everyday commerce.
    I have a question, just jump right to it, is, according to 
the bipartisan study from the Dollar Coin Alliance in Canada, 
approximately 10 percent of our population saved $450 million 
over the first 5 years of moving to a coin-base as opposed to 
the dollar bill.
    Can you tell me what your opinion is on that happening, Mr. 
Olijar, first and then Mr. Ryder either way? I would like to 
hear from both you, what is your opinion on that, particularly 
referring to the Currency Optimization, Innovation, and 
National Savings Act. Let me just clarify, a study on the penny 
and then moving to the coin similar to Europe and Canada, if 
you could tell me what is your opinion, it says there is going 
to be a cost savings, is that true? Can you give me a little 
quick pro and con just for a few seconds there?
    Mr. Olijar. The American public obviously loves the dollar 
bill and prefers to use that in commerce. Treasury's policy is 
that the note and the bill co-circulate and given a choice, 
people significantly prefer the paper note.
    The analysis that GAO did of the conversion shows that 
after 10 years it would be a net cost to the U.S. Government of 
over $500 million of making that conversion.
    Ms. Tenney. How about giving, Mr. Ryder, do have an 
opinion?
    Mr. Ryder. Yes. As the chairman mentioned in his opening 
statement, one of the issues that has constantly plagued the 
dollar coin is reluctance to remove the dollar bill.
    Ms. Tenney. Yes.
    Mr. Ryder. The two just haven't co-circulated. Currently 
there are 1.1 billion-dollar coins in the Federal Reserve 
storage vault and in our storage vaults, and that equates to 
about a 14-year supply, if we use 80 million coins a year.
    The program as designed hasn't worked.
    Ms. Tenney. Yes. It is interesting because the GAO says 
that savings would be about $4.5 billion over 30 years. That is 
pretty significant when you realize the paper version lasts 
about 5.8 years and the coin lasts longer.
    I know when I was in Europe and you get the coin, as an 
American citizen we are so used to having the dollar bill but 
actually you find the coin is pretty convenient.
    Maybe your point is right, maybe if the Americans didn't 
have the choice maybe they would actually decide they liked the 
dollar coin better. That is up for debate at this point.
    But I am thinking as you are advocating for, and I am 
looking at the GAO on renovating the new site, that you are 
proposing, would be $2 billion but then a new site, which would 
be higher technology, as you advocate, would be $1.4 billion so 
there would be a savings.
    If we did move to the dollar coin, wouldn't that actually 
take care of some of the savings on building the building that 
you want to build? Technically we could save money that way if 
we are looking at a fiscally conservative message.
    Mr. Olijar. I don't think it would have a significant 
impact overall, if you eliminated the dollar bill, the demand 
for the $2 note would most certainly go up and as it exists 
today the $1 note is only about 14 percent of our volume.
    Ms. Tenney. OK. I know you have answered this before but I 
missed it, could you just tell me again what your opinion is on 
eliminating the penny, is that something you would advocate for 
or not Mr. Olijar first?
    Mr. Olijar. I am agnostic.
    Ms. Tenney. OK.
    Mr. Olijar. I am a coin collector so--
    Ms. Tenney. Oh, there you go.
    How do you feel about challenge coins, they are out there--
    Mr. Olijar. Love them.
    Ms. Tenney. We could be making those.
    Mr. Ryder, what do you think?
    Mr. Ryder. No. It is not the intention of the Treasury 
Department to eliminate the penny, our intention is to try to 
create programs to increase circulation of pennies that are 
currently out there.
    Ms. Tenney. Yes.
    Mr. Ryder. If we can do that effectively with the Federal 
Reserve's assistance, I believe we can reduce the penny 
production by approximately 2 to 3 billion per year.
    Ms. Tenney. The savings?
    Mr. Ryder. 2 to 3 billion demand for--
    Ms. Tenney. Demand? OK.
    How much in savings would that be to the taxpayer?
    Mr. Ryder. Probably in the neighborhood of $20 million, $25 
million.
    Ms. Tenney. Twenty-five million annually?
    Mr. Ryder. Potentially.
    Ms. Tenney. OK. That is better than nothing.
    Mr. Ryder. Yes ma'am.
    Ms. Tenney. Thank you. I appreciate your comments.
    Thank you. I yield back.
    Chairman Barr. The gentlelady yields back.
    The Chairman recognizes the gentleman from Oklahoma, Mr. 
Lucas.
    Mr. Lucas. Thank you, Mr. Chairman. I apologize for being 
late. This is also Farm Bill Conference morning, so kicking off 
with the esteemed other body to start the process to address 
that.
    To both directors, I apologize for being late and have 
arrived way into the discussion so just for the sake of 
conversation, you mentioned that 14 percent of the paper 
currency printing is the $1 bill.
    Of the volume of Mint production what percentage in dollar 
value or tonnage, however you want to describe it, Mr. Ryder, 
what percentage is the one-cent piece?
    Mr. Ryder. Currently the one-cent is about 8.4 billion 
compared to the five-cent which is 1.3; the dime is 2.4 
billion; the quarter-dollar is at 1.9, for a total of about 14 
billion coins produced.
    Mr. Lucas. More than slightly half of the production of the 
Mint at current levels would be one-cent pieces?
    Mr. Ryder. Correct.
    Mr. Lucas. OK. Fair enough.
    As my colleagues discuss these issues of course, I think 
back to the historic beginning of both your institutions. Mint, 
1790's, Bureau of Engraving and Printing, 1860's so to speak, 
and the goal of both institutions reflected the time. And for 
the benefit of some of my colleagues here, the original Mint 
Act of 1792, the goal was to make sure that the coins produced 
at the Mint, the material in that coin reflected the value of 
the coin at the time.
    A one-cent piece was a big old chunk of copper. From 1793 
to 1857 we made half cents, we did all sorts of stuff like that 
and with time and commerce and the focus, things change. We 
went from big old giant one-cent piece to the present coin that 
we all think of, of course. Just as on the paper side, we went 
from those rather large banknotes prior to 1929, to the size we 
use now. Nothing has ever set in stone and the goal is to 
reflect the needs of commerce and of the industry.
    It would seem to me that, even though as some of my cohorts 
discussed, Bitcoin and the other electronic types of currency 
or even the more traditional use of debit and credit cards and 
that sort of stuff, obviously from the production levels that 
both of your institutions are engaged in, there is still a need 
for the physical commodity, the consumer still wants the 
physical commodity so it is important that we maintain that.
    I would suggest that at some point, I believe we need to 
assess in both currency and in coins what we have. We don't 
make half-cent pieces anymore. We don't make half-dimes 
anymore. We went off the Gold Standard. We don't stamp out gold 
coins anymore.
    We released into general circulation the last standard 
silver dollars in 1960, to 1963, somewhere along that period of 
time so, at some point, we need to have a piece of legislation, 
I believe, that addresses the denominations, the makeup, and 
the size, a comprehensive review and our neighbors around the 
world have done that. But that is a different day.
    A number of my colleagues have stressed the importance of 
the bullion coin programs and counterfeiting and that is an 
issue not just with the bullion coin programs but as the value 
of the historic coin issues for say the Mint have gone up, the 
tendency and the focus on counterfeiting those two are there 
also.
    Can you explain, each of you from your own perspective, 
what you believe is the greatest challenge you face, is it 
production volumes, is it your old facilities, is it 
maintaining the integrity of the products you produce, that is 
an open-ended question?
    Mr. Olijar. For me at the Bureau of Engraving and Printing, 
the greatest challenge that we face is keeping the Nation's 
currency secure.
    As I have said, there are counterfeiting threats that we 
face around the world today and our paper currency is really a 
confidence-game and we need to maintain people's confidence in 
our currency in order to continue its usage as a store value 
and in commerce.
    Mr. Lucas. This is not an appropriate question for you but 
my understanding is more a Federal Reserve question, don't we 
have more $100 bills outside of the United States physically 
than we have inside the United States?
    Mr. Olijar. Yes. It is estimated two-thirds of them 
circulate outside this country, yes.
    Mr. Lucas. That says something about the store value that 
our paper currency represents and am I fair to say too that we 
are one of the few countries, if maybe not the only country, in 
the world where if I go to a bank with a product that you 
printed and the Treasury issued in 1863, it cashes just the 
same as if I pull out a brand-new $1 bill that came from D.C. 
or from Fort Worth, unlike most of the world that recalls 
currency and cancels currency?
    Mr. Olijar. That is correct. We have never devalued and or 
dis-denominated our currency. I would say good today, good 
tomorrow, good forever, that is what the United States say.
    Mr. Lucas. Everybody on the planet wants it under their 
pillow, if they want a nest egg.
    From the Mint perspective, again the products that you have 
issued, your institutions issued since 1793, 1792, all still 
legal tender, all still spendable, tell me about the challenges 
you face?
    Mr. Ryder. I agree with Len, counterfeiting is an issue 
that we have to address. That is something we take very 
seriously.
    On the numismatic side of our business, our customer base 
has dwindled. When I was Mint Director in 1992, we had a 
customer base of around 2.7 million, today it is around 
500,000.
    Working with Congress to create some new innovative 
projects from both the bullion and the numismatic side would be 
of great interest to me.
    Mr. Lucas. Would the Chairman indulge me for 1 more minute?
    One of the comments that I get direct from the general 
public, on the occasions that these topics come in, they point 
out how from basically the mid-1960's until the early 1980's 
there were very few products available to the consumer out 
there from the Mint, other than just the standard-issue 
products, the proof sets, the Mint sets, and the things that 
went through commerce.
    Since the 1980's the number of products, the number of 
metals, the number of different pieces, I occasionally get 
comments about how deep one's pocket would have to be if you 
wanted a complete set.
    Do you think that is a fair observation from the public?
    Mr. Ryder. Yes. I believe that over the years, there have 
been quite a number of products legislated that we have had to 
manufacture, that haven't been that successful.
    Mr. Lucas. It is a fair observation, you only make what we 
authorized or insist you make?
    Mr. Ryder. Correct.
    Mr. Lucas. That issue is shared by this side of the table?
    Mr. Ryder. With the exception of some of our bullion 
products that sell quite nicely, a new 9999 bullion product, 
the Buffalo program, a Palladium program that was authorized by 
Congress. The Secretary of Treasury has certain authorities to 
be able to do certain things. The majority of the products are 
legislated but I would really look forward to working with the 
Congress when we are drafting that type of legislation to work 
together to create legislation that makes a bit more sense from 
the consumers' point of view creating more of a rarity, 
creating different programs.
    I would love to see the next Quarter programs to be more of 
a sports-related type of product to follow the America the 
Beautiful program which generated almost 72 million.
    Changing that in 2021 with the help of Congress would be a 
very interesting challenge but very rewarding for our customer 
base.
    Mr. Lucas. Mr. Chairman, there is not enough time left in 
this session of Congress to address these issues, but this is 
perhaps something we need to, as an institution, look at in the 
coming year or 2, the overall process completely.
    Chairman Barr. I thank the gentleman for his suggestion.
    Mr. Lucas. I yield back.
    Chairman Barr. Thank you. The gentleman yields back.
    I appreciate the gentleman's suggestion and I will be happy 
to work with him to pursue that.
    If the witnesses would indulge me for one final round of 
questions, I just wanted to follow up on a few points and since 
we were on the subject of the declining numismatic customer 
base, I did want to ask why that is the case to Mr. Ryder.
    Why do you think that is the case especially given the 
success of the America the Beautiful Quarters program and do 
you count the Commemorative Coin programs or the America the 
Beautiful Quarters program as part of that new numismatic 
customer issue?
    Mr. Ryder. It is the primary reason in my opinion. In the 
last 10 years, the Mint was not given authority to spend any 
money on marketing our products globally.
    I am trying to change that around to get more allocation of 
funds from the Treasury Department to spend on important 
advertising of these programs which is another one of my 
priorities.
    Chairman Barr. You may have already answered this question, 
but from the start to the projected finish of the America the 
Beautiful Quarters program, what is the total seigniorage that 
will be produced as a result of that program as a result of 
coin collectors pulling those quarters out of circulation for 
keep-sake?
    Mr. Ryder. That is a good question and I don't know the 
specific answer.
    The total revenue that we generated on that program after 
cost and whatnot was about $72 million.
    A new program that is coming up now, the American 
Innovators program which is a Dollar-Coin program, we are 
hoping to generate total revenue in this neighborhood of $350 
million.
    But that is going to be a brand-new program but I would 
stress that the America the Beautiful Quarters program expires 
in 2021, and I would really like to work with the Congress to 
create a new program going forward after 2021 that would 
inspire young collectors and whatnot with the right theme to 
get back into the coin collecting community and raise our 
revenues that much more.
    Chairman Barr. Some numismatists in my district came to me 
with an idea that ultimately manifested itself in legislation I 
introduced a couple of Congress' ago, we called it the 
``American Liberty Coinage and Deficit Reduction Act,'' and 
that bill proposed to direct the Mint to, on every other year, 
instead of having the head-side of the coin reflect Statesmen 
from the past, not pulling those off of the coins, but keeping 
them in every other year, but in every other year going forward 
putting a symbol of liberty on the coin.
    The idea was that this could create additional collectors. 
It could attract more seigniorage.
    Is that an idea that would appeal to you or that you would 
consider going forward?
    Mr. Ryder. Absolutely.
    We are going to introduce another Liberty product in 2020 
or 2019 I believe it is, but I like the theme that you have on 
that piece of legislation, Liberty.
    In my opinion, Liberty comes in a lot of different forms, 
that encompasses the United States of America and it could be 
anything from the Statue of Liberty to a starburst of 
fireworks, there are a lot of things that, from a design point 
of view, we could put in that program that would generate 
interest going forward for the collector community.
    Chairman Barr. Yes. The legislation specifically referenced 
celebrations of American Liberty; the Union; American values; 
attributes of freedom; independence; civil governance; 
enlightenment; peace; strength; equality; democracy; justice; 
those concepts could be used to generate additional interest 
and maybe help increase the numismatic customer base to address 
that issue that you mentioned.
    Mr. Ryder. Absolutely.
    Chairman Barr. I would love to work with you Mr. Ryder on 
that issue.
    Our time has expired today but, would the gentleman like to 
ask another question, in my remaining time?
    Mr. Lucas. No Mr. Chairman. Just to offer and an 
observation there.
    Chairman Barr. Sure.
    Mr. Lucas. One of the important things about our coinage, 
which sometimes we forget in the day-to-day commerce, this is 
something that as societies, as countries that we took up on 
this planet 2,500 years ago, and in many ways there are images 
of leaders, images of concepts from the ancient times, that 
only exist because they were incorporated as a coinage theme, 
so we should always be artistically mindful about the legacy 
that we leave when we produce things.
    We are not just stamping out pieces of metal, we are 
leaving a statement for all time, about who we were and what we 
are, so the artistic element always must be factored into our 
coinage and engraving programs.
    Thank you, Mr. Chairman.
    Chairman Barr. Well said. I couldn't agree with you more. I 
appreciate your passion and interest in the issue. It is very 
important.
    We appreciate the service of Mr. Olijar and Mr. Ryder and 
for the work of the thousands of public servants who work for 
your Bureaus, we appreciate every single one of them for their 
work and for their service to our country.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    Once again, I want to thank our witnesses for their 
testimony today.
    This hearing is now adjourned.
    [Whereupon, at 11:48 a.m., the subcommittee was adjourned.]

                            A P P E N D I X



                           September 5, 2018
                           
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