To spread the word, the department is spending millions of dollars on advertising and on setting up toll-free hot lines around the world. Nevertheless, promises about cash are often viewed with deep suspicion by foreigners who have watched their own currencies become virtually worthless. Many analysts believe that this slowdown largely reflected foreign holders' concerns about the new currency. Moreover, now that the redesigned note has been released, currency growth is expected to accelerate to near previous levels. Only time will tell if the currency growth rate will return to a level more consistent with its previous trend.
Dotted lines represent growth ranges and are for reference only.
Board of Governors of the Federal Reserve System. Policy Implications Large swings in overseas holdings of U.S. currency typically have little impact on the current level of domestic economic activity. Rather, such movements distort the historical relationship between currency and the economy, making currency a less reliable indicator. For example, the slowdown in currency growth in early 1995 accentuated the decline in both the monetary base and M1. Because the currency slowdown most likely reflects reduced foreign demand, it seems doubtful that deceleration in the narrow money measures portends a weakening economy, as it might have in years past.