COVID-19 has caused a temporary coin shortage. Some stores are asking customers to pay with credit, debit, or exact change only. One supermarket chain even stopped accepting cash at the self-checkout. There are two reasons for the shortage.
- Production of coins was halted by the U.S. Mint due to Coronavirus restrictions.
- Distribution of the coins by the Federal Reserve was disrupted by the COVID-19 shutdown.
While the Mint manufactures new coins, the Federal Reserve is in charge of distributing coins. They collect them from commercial banks, community banks, credit unions, and thrifts) through Reserve Bank cash operations and offsite locations across the country operated by Federal Reserve vendors. Financial institutions then distribute those coins to retail operations.
Back in mid-June, the Federal Reserve announced a temporary coin order allocation restriction. Banks received a limited supply of pennies, nickels, dimes, and quarters. The amount was based on the past need for coins and the supply for each particular coin.
In a statement, the agency said, “Although the Federal Reserve is confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns, we recognize that these measures alone will not be enough to resolve near‐term issues.”
The Federal Reserve said it was working on several strategies to take care of the problem. “This includes managing the allocation of existing Fed inventories, working with the Mint, as issuing authority, to minimize coin supply constraints and maximize coin production capacity, and encouraging depository institutions to order only the coin they need to meet near‐term customer demand. Depository institutions also can help replenish inventories by removing barriers to consumer deposits of loose and rolled coins.”
Shoppers will also notice that many stores have signs posted asking that they pay with exact change or use a credit or debit card. Keep that in mind when you head out the door. If you have a piggy bank at home full of change, now might be a good time to take it in to spend.
One thing you should not do: hoard change. Coins are not suddenly more valuable. There is no coins shortage, just a kink in the supply change.