Pandemic Leads to National Shortage of Coins, Federal Reserve Task Force Created to Help


In fast food restaurants, supermarkets, banks, and other businesses across the country where cash normally changes hands, customers are warned that coins are in short supply.

Scott Talan discovered that last weekend when he used a Starbucks drive-in movie theater in Virginia and came across a handwritten sign that said, “Due to a shortage of national currencies, we can only accept exact exchanges or electronic payments at this time.” .

He thought it was a joke.

“I was going to email the store manager or Starbucks headquarters because it didn’t seem official,” said Talan, an assistant professor at the American University in Washington, DC. “Everything is very strange and appropriate for the times we are in.”

Starbucks did not immediately respond to a request for comment on Wednesday.

The apparent absence of enough coins on the nation’s market has alarmed the federal government enough that the Federal Reserve last month established a United States Coins Task Force to “mitigate the effects of low coin inventories caused Due to the COVID-19 pandemic. “

The 22 members of the task force were announced on Friday, representing government agencies, banks and companies, and will meet this month with the aim of sharing recommendations in early August to identify the “actionable steps that participants in the chain of supply can take to address the current currency circulation problem. “

Daniel Soques, an assistant professor of economics at the University of North Carolina, Wilmington, called the situation a “perfect storm” of circumstances stemming from the pandemic, during which companies that trade heavily with coins, such as laundries, may have closed, while fear of contracting the coronavirus by touching the coin may have encouraged people to completely avoid physical monetary transactions. Coinstar, which operates around 22,000 currency exchange kiosks across the country, said volume slowed amid state and municipal blockades. Production of new coins was also hampered at the US Mint production facilities in March and April.

And, when the economy began to sink with record losses in the spring, it was enough for some people to “start hoarding coins and hoarding money generally,” Soques added.

Last month, Federal Reserve banks began allocating money from existing currency inventories to banks as a “temporary measure.” As of April, there were about $ 48 billion of coins in circulation, the United States Treasury estimated.

The Federal Reserve said in a statement that it “is confident that currency inventory problems will be solved once the economy opens more widely and the currency supply chain returns to normal circulation patterns,” although “it acknowledges that these Measures alone will not be enough to solve short-term problems. “

Federal Reserve Chairman Jerome Powell acknowledged at a hearing in the House Financial Services Committee last month that banks are also suffering from a lack of “currency flow.”

“We are working with the mint to increase supply, and we are working with reserve banks to get that supply to where it should be,” Powell said. “So we think it is a temporary situation.”

While the Federal Reserve has stopped labeling this as a “coin shortage,” that’s exactly what it is, Soques said.

The shortage of circulating coins is not unknown. In 1999, a “penny drought”, presumably caused by people disinterested in using or piling them up in jars, forced some companies to ask customers for help or ration coins.

Today, some companies notify customers that they have no change to make, while others tell them that they are rounding prices to exact amounts since paper bills are not scarce. In other cases, companies only carry out electronic transactions.

But that may also be cause for concern, Soques said.

“While it’s not necessarily a bad thing to get away from cash and physical currencies, it will disproportionately harm people on the lower end of the financial spectrum,” he said. “They are the ones who generally don’t have a bank account, so if you go digital, you are at a disadvantage.”