Federal Reserve notes

Federal Reserve notes are paper currency issued by Federal Reserve Banks in the United States, and at present are virtually the only type of U.S. paper money in circulation.

The notes are not backed by, or redeemable in, gold or silver. Instead, the issuing Federal Reserve banks are required by law hold gold certificates, U.S. securities, and other collateral equal in value to the notes they issue. Moreover, because federal law declares the notes to be legal tender, they can be regarded (in the words of the U.S. Treasury) as being "'backed' by all the goods and services in the economy."

The first Federal Reserve notes were issued in 1914, the year after the Federal Reserve System was created. At that time, much paper money in circulation consisted of National Bank notes, issued by individual commercial banks under federal regulation, as well as gold certificates and silver certificates. Issuance of National Bank notes and gold certificates stopped as a result of financial reforms in the early 1930s, during the Great Depression, and when the issuing of silver certificates stopped in 1963, Federal Reserve notes became the only form of U.S. paper money still being printed.

Originally, the notes were issued in denominations ranging from $5 to $10,000. Printing of denominations higher than $100 ceased in 1946, and the $1 and $2 notes were added in 1963.