The coronavirus pandemic is short-changing the economy. It has created a new nationwide shortage of coin. A growing number of businesses have had to stop giving change in coins. Many are asking customers to use cards or provide exact change whenever possible, while some smaller businesses and franchises have stopped accepting cash altogether.
The problem is two-pronged: The U.S. Mint significantly reduced its production of coins after implementing safety measures to protect its employees from the coronavirus. Consumers are also depositing fewer coins at the U.S. financial institutions, according to the Federal Reserve.
Due to coronavirus fears, many people have switched to using credit cards and mobile payments to avoid handling money. Meanwhile, the shutdown also forced some businesses to close that would normally help keep coins moving. With establishments like retail shops, bank branches, transit authorities, and laundromats closed, the typical places where coin enters our society have slowed or even stopped the normal circulation of a coin. The shortage is especially troubling for people who are unbanked and rely on cash for everyday purchases. Cash-only businesses are also suffering.
While the Fed works to improve the coin inventory and the U.S. Mint churns out more coins, there is one big part of the problem that still needs addressing: consumers. Consumers should consider depositing their coins at a bank or spending them at a local business to get coins back in circulation. According to William Dickens, university distinguished professor of Economics and Social Policy at Northeastern University, instead of being re-circulated, those coins are just sitting in people’s pockets or their dresser drawers—they’re not going back into the system. The challenge will be the biggest for businesses, which are running short on coins and may not be able to get their full order of coins from banks.
The Federal Reserve and the U.S. Mint, along with other financial groups, are working to fix the problem. However, it’s unclear when the shortage will end.
Some of the questions the group is mulling over is- Did the pandemic throw a curveball, and do they need to rethink the way coins are stored or delivered? Are there ways to streamline the supply chain to get the coin out now? How do we alter the supply chain to push coin out?