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If you look closely at the circle you'll see the wording "Federal Reserve Bank of ..." around the letter. The letter indicates which Federal Reserve Bank district requested and distributed the bill:

A - Boston

B - New York

C - Philadelphia

D - Cleveland

E - Richmond

F - Atlanta

G - Chicago

H - St Louis

I - Minneapolis

J - Kansas City

K - Dallas

L - San Francisco

Of course the bill wasn't actually printed in that district. All US bills are printed in Washington or Fort Worth at the request of a particular Federal Reserve District bank. All bills in that order are printed with the bank's letter code as well as its numeric equivalent.

When higher-denomination bills were redesigned in 1990 the government simplified the seal to remove the letter and city name. The letters continue to be part of the serial number prefix, though.

$1 and $2 bills were never redesigned and continue to use the old-style seals with letters.

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Q: What do the letters inside the circle of a US dollar bill stand for?
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