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There is about $1.2 trillion dollars of U.S. currency in circulation. The Federal Reserve Banks distribute new currency for the U.S. Treasury Department, which prints it. Depository institutions buy currency from Federal Reserve Banks when they need it to meet customer demand, and they deposit cash at the Fed when they have more than they need to meet customer demand.
Mutilated currency must be mailed or personally delivered to the Bureau of Engraving and Printing. Here, according to the U.S. Treasury, is how to do it: When mutilated currency is submitted, a letter should be included stating the estimated value of the currency and an explanation of how the currency became mutilated. Each case is carefully examined by an experienced mutilated currency examiner.