Bank Watch

Inside the vault at the Charlotte Federal Reserve branch

While Charlotte’s big-bank skyscrapers serve as towering symbols of the city’s financial sector, a squat building on East Trade Street is where the big bucks are kept.

Making a payment on a phone is becoming more popular, but the Federal Reserve Bank of Richmond’s Charlotte branch is proof that there’s still a need for cold hard cash. Inside the branch, which spans an entire city block across from Time Warner Cable Arena, millions of dollars in bills are kept underground in a three-story vault encased in steel. That money is shipped daily by armored vehicles to and from North and South Carolina banks with agreements to store it at the Fed.

In an era exploding with digital-payment technologies – think bitcoin and mobile apps – it might seem the days of physical money are numbered. For now, though, such inventions aren’t slowing the flow of cash and coins in and out of the Fed’s Charlotte branch, according to the central bank.

“We have not seen a marked decline, and in fact this year we’re seeing a little bit of a slight volume uptick,” said Kelly Stewart, head of cash operations at the Charlotte branch, during a behind-the-scenes tour of the vault provided to the Observer.

“Cash really does still have a significant role as a payment method,” she said. “There’s still plenty of people that have cash in their wallet that want to use it.”

Cash might still be going strong, but technology has led to changes at the Fed’s Charlotte office.

A shift to electronic check-clearing allowed the Fed in 2009 to shutter its check-processing operation at the Charlotte branch. That closure among other steps has helped reduce the branch’s overall employment by about half since then.

Today, about 219 people work for the branch, including 45 in Stewart’s department. It’s the Fed’s fifth-largest cash-processing operation, as measured by volume of money circulating in and out. New York’s is the biggest, followed by Los Angeles, Chicago and Atlanta.

Charlotte’s branch is part of the Fed’s Fifth District, which has its head office in Richmond, Va., and serves the District of Columbia, Maryland, Virginia, North and South Carolina and most of West Virginia.

The establishment in 1927 of the Fed’s Charlotte office gave a big boost to the city’s reputation as a financial center. The district also has a branch in Baltimore.

Yellow robots

While the Fed gets a lot of scrutiny for its role in setting interest rates and regulating banks, it also has a lot of nuts and bolts responsibilities that make the financial system work. Moving cash from bank to bank is one of the big ones.

Not surprisingly, with so much money on hand, multiple security measures are in place at the Charlotte branch.

Cameras track employees’ every move, from multiple angles. On the floor that houses the vault, four robots – not humans – bring in and remove large metal bins that store bills.

Those bins, called buses, can hold as much as $28 million apiece and are stacked from floor to ceiling in the vault, which is as wide as two basketball courts.

Generally, employees no longer have to enter the vault ever since the robots were implemented about eight years ago, Stewart said. Not every Fed vault in the U.S. uses such robots yet.

During the Observer’s recent visit, the robots, which resemble large yellow refrigerators, glided into and out of the vault nonstop. The machines remove money from the vault to fill orders for cash placed by banks.

“We have named them Smash, Dash, Crash and Flash,” Stewart said. “That is actually how they behave. ... Smash and Crash really do occasionally smash and crash.”

Stewart declined to disclose how much money is stored in the vault that holds bills or a separate one, about the size of a soccer field, that holds coins.

“It’s a lot,” she said.

On average, Stewart said, the branch takes in about $1.7 million in coins a day and fills orders from financial institutions for about the same amount. The branch also receives about $111 million in cash a day and fills orders for about $124 million, she said.

The branch has enough money on hand to meet the needs of banks in the Carolinas for about 40 business days, if a natural disaster or some other crisis struck the region, Stewart said.

Bloody notes

Storing money for banks is just one of the branch’s functions. Another is spotting damaged or counterfeit money mixed in with the deposits arriving from financial institutions.

The branch runs the money it receives through high-speed equipment, so its sensors can spot any problem bills. According to the Fed, the equipment can process about 40 bills a second.

Torn bills are destroyed on site by the Fed, the only entity authorized to shred U.S. currency, Stewart said.

(Useful tip next time you’ve got a torn bill: “The standard rule is if you have more than 50 percent of the note, it’s still considered a valid note,” Stewart said. “If you went to a financial institutions, they would probably accept it.”)

If suspected counterfeit money is found, the Fed ships it to the Secret Service to analyze.

Which note is the most popular to counterfeit? Stewart said trends suggest it’s the $20 bill among U.S. counterfeiters, while the $100 bill is the most likely to be counterfeited internationally.

Many people know that money is not the cleanest thing around. Take it from Stewart, it can get really gross.

“We have some processes and procedures for very nasty money,” she said. “It can be pretty bad, honestly. ... I don’t know why there’s blood on someone’s note.”

Lately, Stewart said, the Fed’s Richmond office has been dealing with moldy money coming from parts of the country dealing with flooding, such as West Virginia.

Other times, a really old bill that’s no longer produced will show up in the branch.

“I want to say ... a $1,000 denomination may have come through,” Stewart said. “But they’re really rare.”

“They’re beautiful, beautiful,” she said. “The old series notes are so intricate in their design, and they just end up being destroyed. It’s kind of sad.”

New money comes twice a year

Stewart said banks can only ask the Fed to send them brand new money two weeks out the year, which lets financial institutions get fresh bills that people tend to request around the holidays.

In only one other case will the Fed let a bank order new money: if one of the bank’s customers is involved in an overseas adoption of a child.

“One of the things that is very common is that those can sometimes be cash transactions, and they want the new notes,” she said. “We’ll make an exception there.”

Of all the activities that go on at the Charlotte branch, there’s one it does not perform – contrary to what some people might think.

“We do not print the money,” Stewart joked.

That, she said, is the job of the U.S. Bureau of Engraving and Printing.

Deon Roberts: 704-358-5248, @DeonERoberts