At grocery stores, convenience stores and hardware stores across America, curious signs are popping up asking customers to pay with credit cards, debit cards or exact change. Is it because cashiers don't want to handle physical dollars and cents that could be contaminated with the coronavirus? Nope, it's because the United States is currently experiencing a coin shortage.
Where Have All the Coins Gone?
America's pennies, nickels, dimes and quarters haven't disappeared; the COVID-19 pandemic has simply disrupted the normal cycle of coin circulation. According to the U.S. Treasury, there were $47.8 billion of coins in circulation as of April 2020, which was actually $400 million more than in April 2019, but those coins are not moving through the economy like they should be.
The Federal Reserve gives several reasons as to why there are fewer coins in circulation:
- Banks and businesses nationwide closed their doors during the lockdown phases of the pandemic, including cash- and coin-heavy sectors like convenience stores, public transit and laundromats.
- The U.S. Mint also slowed its production of new coins during the early stages of the pandemic as staff was reduced for safety reasons at the mint's Philadelphia and Denver locations.
- Even as the economy reopens, consumers are opting for "contactless" payment and generally using less cash and coins, meaning more coins are sitting at home in Mason jars, piggy banks and under couch cushions.
What's the Impact of a Coin Shortage?
Retail stores are feeling the pinch and passing the inconvenience along to their customers. The National Grocers Association and several other retail industry trade groups sent a strongly worded letter to Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin in late June saying that rationing coin shipments to banks "threatens the functioning of our member businesses and, by extension, the needs of our customers."
In their letter, the groups cited economic statistics showing that cash is still very much king in certain sectors and among certain consumer demographics:
- 45-60 percent of sales at grocery stores and convenience stores are cash payments
- Nearly half of all transactions of $10 or less are paid in cash
- Consumers with an annual household income of $25,000 or less pay cash in 43 percent of transactions
What's the Solution?
The long-term solution is to wait for the economy to return to normal, at which point coins will naturally flow back into circulation, but in the meantime the Federal Reserve and U.S. Mint are taking action.
The mint has ramped up coin production, outpacing its usual 1 billion coins a month with 1.2 billion coins in June and 1.35 billion a month for the rest of 2020, according to The New York Times. The Federal Reserve announced in June that it was rationing out its coin inventory by sending banks and credit unions smaller-than-normal coin shipments based on historical demand.
The Fed also convened an emergency U.S. Coin Task Force composed of government and industry leaders, including banks and armored car companies. The task force is expected to come up with a set of recommendations by the end of July. One of the task force's early accomplishments was to create the hashtag #getcoinmoving, which banks and credit unions are plastering across Twitter to encourage people to cash in their piggy banks to get more coins back in circulation.