Why Is There A Coin Shortage?
Out of everything caused by the pandemic, you may not have considered the US coin shortage.
The world shuttered itself indoors as scientists find a way to beat COVID-19. This sedentary lifestyle caused people to purchase everything online.
Of course, we’ve mostly relied on credit cards and debit cards before the pandemic. Buying stuff on the internet has been the norm, too, so we’ve barely paid attention to coins.
However, this stalled coin circulation throughout the country. Now, the United States pays the price for the ongoing coin shortage.
In response, the US Federal Reserve has formed a team to investigate this issue.
Its members assured the public that it would soon be resolved. Meanwhile, they advised Americans to assist in restoring the nation’s coin supply.
Spare a thought for spare change, and learn more about you can help.
So, The US Is Running Out Of Coins?
Last year, the Fed released information regarding the nationwide coin shortage.
They mentioned that the United States Mint was at full capacity in June 2020. It has minted 1.6 billion coins for that month, and it will soon create 1.65 billion per month.
Unfortunately, the pandemic disrupted supply chains around the world. It also impacted the number of coins going around in America in various ways.
Factors and What Caused This
Business and bank closures significantly contributed to the US coin shortage.
The government enforced lockdowns that shut down business establishments. Commercial banks, credit unions, and financial institutions also closed their doors.
These served as the supply chain for US coinage. Due to the lockdowns, these institutions strained to replenish the nation’s coin inventory.
Furthermore, the massive business closures were another large factor in the coin shortage.
Numerous small businesses had to halt operations due to the COVID-19 lockdowns. What’s more, consumers stayed away from these establishments to avoid contracting the virus.
Paper bills and coins only circulate when people use them for purchases. Since consumers haven’t been shopping at physical stores, less currency flows through the economy.
Worse, people have grown accustomed to cashless transactions. As we’ve mentioned, most people use credit cards for most of their purchases.
Moreover, folks have been ordering everything on the internet to avoid the outdoors. As a result, we’ve shifted farther away from tangible currency, further exacerbating the coin shortage.
US Coin Task Force
In response, the US Federal Reserve formed a team tasked with resolving the issue.
In July 2020, the Fed convened industry leaders for the US Coin Task Force. This temporary group of experts determined, executed and encouraged measures to resolve the coin supply disruption.
The members were selected from the following institutions:
- Armored Carriers
- American Bankers Association
- Coin Aggregator representatives
- Federal Reserve
- Independent Community Bankers Association
- National Association of Federal Credit Unions
- Retail Trade Industry
- Unites States Mint
At the end of July, the task force has released its initial recommendations to solve the US coin shortage.
They suggested helping financial institutions handle huge coin deposits. Some banks and credit unions currently lack automated management of their coin inventories.
What’s more, they recommended public campaigns to encourage coin usage. The US Coin Task Force underscores the role of consumers in restoring the coin supply.
Are Coins More Available Now?
While the Fed continues to monitor coin distribution, they’ve yet to resolve the coinage issue.
However, the Federal Reserve reported on January 13 that they’d resume regular coin distribution. They’ll rescind coin limits from June 2020, so financial institutions may freely order them soon.
Nevertheless, the Fed admits that they haven’t resolved the coin shortage yet. Still, they will continue efforts to replenish the nation’s coin supply.
How The Coin Shortage Affects Consumers
Contrary to popular belief, the worth of coins overshadows their minuscule size.
As a kid, you may remember these bits of metal in your piggy bank. Now, you may occasionally remember them when you pick a few under the sofa.
Most people don’t use physical currencies nowadays. As we’ve discussed, most Americans buy stuff on the internet or use plastic in physical stores.
Lack Of Coins Causes Lack Of Profits
However, the country still needs coins and paper bills. They allow small businesses to function and eventually grow.
Some mom-and-pop stores can only accept physical currencies, but their customers have none due to the coin shortage. This prevents their clients from buying their products and services, so their profits decrease.
Other examples include coin-operated gas pumps, vending machines, and laundromats. People can’t use these without coins, so their corresponding businesses lose profits.
Even the National Grocers Association (NGA) urged swift federal action to replenish the coin supply. It sent a letter to the US Department of the Treasury on June 23, 2020.
Coin Shortage Inhibits Currency Usage
Coins allow people to buy cheap items using physical money.
Let’s say you’re buying a soda at your neighborhood store, but you only have a $100 bill. If the cashier doesn’t have coins, they can’t give change.
This means you can’t buy a fizzy drink from that place unless you want to leave around $90 as a tip for a can of soda!
Unfortunately, convenience stores and grocery stores nationwide face this dilemma. The National Association of Convenience Stores and other small business groups even signed the NGA letter.
Coin Shortage Impact Low-Income Consumers
There are still people who rely on coins and bills, so the shortage also hits them.
Some folks can’t use credit cards to buy stuff, let alone order them online. Instead, they use physical money at small businesses to purchase goods and services.
With no access to alternative forms of payment, these individuals may struggle to meet their needs. In turn, this could exacerbate their difficult way of life.
What You Can Do to Help
Fortunately, we can help resolve the coin shortage in numerous ways:
- Bring cash when shopping outside – Apparently, buying with bills and coins allows them to circulate in the economy. Even better, it could reduce your exposure to the coronavirus while shopping. The virus can stick to surfaces, so bring exact change.
- Keep up-to-date with payment policy changes – Your favorite stores also know about the national coinage problem, so that they might have revised their payment policies. Ask a store employee if they require exact change for transactions.
- Turn coins into bills at banks and retailers – You could help your local community by exchanging coins for bills at retail outlets and nearby banks. As a bonus, your local store may give you a free drink for turning in pennies!
- Report fraudulent practices to your attorney-general – Immediately file a consumer complaint if necessary. You may post them on the National Association of Attorneys General (NAAG) consumer-facing website.
Summary
The coronavirus pandemic caused a coin shortage in the United States.
It diminished profits for small businesses across the nation. Moreover, it prevented low-income Americans from accessing essential goods and services.
In response, the US Federal Reserve assembled a team of professionals to address this issue.
More importantly, you may help solve this issue as well. Use more coins frequently when buying stuff outside. This adds more coins to circulation, and it prevents potential COVID-19 infection.
It’s time to grab all your pocket change and spare coins. You may realize that you have lots of money as a result!
Similarly, our efforts have a significant impact as a whole. Together, our spare change can spur change.
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