By Caroline Haubenstricker
As COVID-19 spread across the United States and shut down many businesses, the circulation of coins has declined significantly. However, when the nation’s businesses reopened, the demand for coins exceeded the available supply.
James Manseau, executive vice president in charge of retail banking at BNB Bank, believes that the decline in circulation is not a major issue as the shortage seems to be easing as the economy is opening.
“They had curtailed our ability to order coins, but we have tried to shift the coin that we do have on hand,” Mr. Manseau said. “We send them to locations where they are more in demand. We haven’t turned clients away, but we have less on hand than usual.”
The U.S. Mint manufactures coins for the U.S. Treasury, and the Federal Reserve distributes those coins. As their typical routines have been disrupted by the pandemic, both institutions have been working to fight the effects of the pandemic on the coin circulation.
The Mint has been increasing coin shipments to provide supply. The Federal Reserve has been allocating coins to banks based on their previous order history.
On June 17, Federal Reserve chairman Jerome Powell told the House Financial Services Committee that the coin shortage was a result of partial closure of the economy.
“With the partial closure of the economy, the flow of funds through the economy has stopped,” he said. “We are working with the Mint and the Reserve banks, and as the economy reopens, we are starting to see money move around again.”
A June 30 news release from the Federal Reserve reiterated that the slowed pace of circulation of coins, not the number of coins in the economy, was the issue because as of April 2020, the U.S. Treasury estimated that the total value of coins circulating was $47.8 billion, up $400 million from the same time last year.
Carolyn Evert, vice president of northeast regional communications at JPMorgan Chase, wrote in an email that the bank has been asking customers to be understanding if members of their staff need to limit coin orders, and give out fewer coins, while asking customers to bring in rolled coins to deposit to assist with the shortage.
Businesses have also recommended the use of contactless forms of payment due to concerns of the virus being spread by credit cards, cash and coins.
A June 11 news release from the Federal Reserve confirmed that coin deposits to the reserve had declined, and that the U.S. Mint had decreased coin production.