3 Things to Know about the U.S. Coin Slowdown
- Money Management
- Mark Long
From grocery shopping to attending a business meeting or socializing with our friends, we all know the obvious disruptions of COVID-19 on our day-to-day functions. However, as the pandemic continues, we are now facing other lagging effects that haven’t been as easy to predict. One such challenge is a coin slowdown that is affecting businesses and consumers across America.
Financial Institutions are facing a significant reduction in the amount of coin they have on hand, which has created a ripple effect in the amount of coin that businesses have in their cash registers. On the surface it may seem like an insignificant issue given the age of digital payments, but its impact on local economies runs much deeper than you might expect. Therefore, it is helpful to understand what is causing the slowdown, how it might affect the way we do business and what may come next.
In April, the U.S. Mint announced that it halted production of coin out of an abundance of caution in response to the increasing number of COVID-19 cases. “My commitment to the health and safety of the Mint workforce is unwavering and continues to be my highest priority,” said Mint Director David J. Ryder. “These are challenging and unprecedented times, and decisions on Mint operations are made with the best interests of Mint employees first and foremost.”
Simultaneously, many small businesses had to close down across the U.S., depending on each state’s mandate. Many of these businesses rely on cash transactions, such as restaurants. Some may even rely on coin transactions, such as laundromats and car washes. Similarly, fewer bank customers entered banks to exchange their coins for cash. Both of these factors have led to a significant decrease in coin deposits made at financial institutions.
The suspension of new coin being produced, combined with the lack of coin brought into banks created the unusual circumstance that coin has become scarce. In fact, it is currently so scarce that the Federal Reserve has placed limits on how much coin each bank can order for their branches in order to ration its coin distribution.
As financial institutions work to keep up with demand, businesses face the challenge of keeping their cash registers stocked with coin. To keep up, many businesses are instituting a temporary ‘exact change only’ policy for those who pay with cash or asking customers to pay with alternative methods, such as debit cards or credit cards or through Digital Wallet options, like Apple Pay or Google Pay. Some businesses are getting creative, offering a free item for anyone who brings in a certain dollar amount of coin, while others are asking the customer to round their transaction up to the nearest dollar and donate the excess change to a charity that the business supports. Many of these initiatives have worked, as some businesses have seen cash transactions decrease in recent weeks.
The good news is that the U.S. Mint has recently resumed coin production and has been operating at full production capacity since the middle of June. According to a representative from the Philadelphia Federal Reserve (a location which does include a Mint facility), their morning routine includes ordering the maximum coin possible each day to ease the coin slowdown. The Federal Reserve expects these steps will ease the slowdown as more coins hit circulation and the economy opens back up. However, there is no clear indication as to when we can expect coin levels to be back to normal.
While this is a nation-wide slowdown, not all areas are affected equally. Some of our C&N offices are not experiencing any effects, while others continue to operate at low coin levels, depending on their customers’ need for coin. To counteract the slowdown, C&N continues to operate efficiently with branches working together to ensure we balance our coin supply with customer demand by location
The Federal Reserve has also assembled a U.S. Coin Task Force that has been assigned with confronting this issue. In a recent statement, the task force said, “Many have referred to this as a shortage; however, it is not. There is approximately $48 billion in coin already in circulation, most of which is sitting dormant inside America’s 128 million households.” The statement urged consumers to start spending the coins they have at home, depositing coins at their financial institutions and redeeming coins at retail coin kiosks. They also are asking people to use the hashtag #getcoinmoving on social media to help motivate people to do their part.
While the coin slowdown is an unexpected and unpredictable consequence of the COVID-19 pandemic, there are steps that you can take to help navigate this untimely burden on our local businesses. If you plan to visit a restaurant, nail salon or other cash-heavy businesses, it might be a good idea to call ahead or research online how they are approaching this issue so that you can be prepared to abide by their policies. And, if you have a jar of coins at home, now may be a good time to roll it and exchange it for cash at your bank or pay for goods and services at cash-heavy businesses if they are in need of coin. Although COVID-19 has presented many unforeseen challenges and uncertainties, we can contribute to a faster solution by making some short-term adjustments.