Pandemic Causes Coin Shortage in the U.S.Press Release
SAN ANGELO, TX —The economic effects of the COVID-19 pandemic continue to be felt, and in the U.S., it has caused a coin shortage. Many businesses around San Angelo are displaying signs that ask customers to pay in exact change or use a secondary form of payment.
According to The Federal Reserve, that pandemic “significantly disrupted the supply chain and normal circulation patterns for U.S. coin.”
In the press release, the agency explained that the deposits from depository institutions to the Federal Reserve have significantly declined. Also, the production of new coins was decreased as the U.S. Mint aimed to protect their employees.
While testifying before the House Financial Services Committee on Wednesday, the Federal Reserve Chairman Jerome Powell stated the following:
“With the partial closure of the economy, the flow of coins through the economy has gotten all…it’s kind of stopped. We are well aware of this and are working with the Mint and we are working with the reserve banks. And as the economy reopens, we are seeing coins begin to move around again.”
While many Americans have transitioned to electronic payments and online banking, physical money is still an important part of the economy.
According to the Wall Street Journal, a shortage of physical money and coins tends to affect low-income people and minorities, and those who do not own bank accounts.
In order to mitigate the impact of the shortage The Federal Reserve, which manages the coin inventory, is taking several steps. The efforts began on June 15th and are centered are replenishing the depository institutions that then redistributing the coins. This means that available supplies of pennies, nickels, dimes, and quarters will be taken to depository institutions as a temporary measure.
The allocation is based on historical order volume by coin denomination and depository institution endpoint, and current U.S. Mint production levels, according to the press release. Limits are based on denomination and are the same across all Federal Reserve coin distribution locations. Limits will be reviewed and revised based on national receipt levels, inventories, and Mint production.
These include minimizing coin supply constraints, maximizing coin production capacity, encouraging depository institutions to order only the coin they need to meet near‐term customer demand.
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