Bankers, retailers, and even the U.S. Mint are asking people around the nation to empty their coin jars and piggy banks to help restore the supply of spare change in the economy.
Banks and credit unions use a coin and currency processor to keep a minimum supply of cash on hand for customers. But for various reasons, all related to the Covid-19 pandemic, the supply has dwindled nationally.
“Since Covid has occurred, we continue to place orders with our provider, and if we’re getting 10% of what we’ve been requesting, we’re lucky,” said Karyn Hale, chief financial officer at Union Bank in Morrisville. “It’s this ongoing shortage.”
Coins typically enter circulation through retail stores, bank branches, and laundromats. The Mint also produces about 20% of the coins in circulation each year. With the shutdown of the economy in March, consumers stopped bringing their coins into banks and also increased their online shopping, using debit and credit cards, said Hale.
“We are providing coin to businesses who in turn are making change for those customers that pay with cash,” Hale said. “Pre-Covid, that change/coin would come back to the bank from customers. Currently, customers are not bringing coin back to us.”
More than 4 billion coins were being deposited or recirculated each month at the beginning of the year, said Chris D’Elia, president of the Vermont Bankers Association. He said that number dropped to less than 2 billion starting in April.
Federal Reserve Chairman Jerome Powell testified about the shortage at a virtual hearing of the House Financial Services Committee June 17. He said store closures were to blame, according to Numismatics News.
The Mint also cut back its operations as a result of the crisis. Meanwhile, orders to the Mint have increased. On July 23, the Mint put out a statement saying that there is an adequate supply of coins circulating in the economy, but that the coins aren’t always in the right place at the right time.
“We are asking for your help in improving this coin supply issue,” the statement said.
Sally Deinzer, a former board member who works for the coop that runs Pierce’s general store in Shrewsbury, found out about the supply problem when she went to the bank July 20 to get $30 worth of quarters.
“I was told the bank had no quarters and that there was a national shortage,” said Deinzer. However, the store does have a coin jar on the counter where customers can donate their change to the financially struggling general store, which came close to breaking even in 2019, its tenth year as a coop.
“Now we give the change to the customer and if they chose to put it into the jar, they do,” said Deinzer. “Basically, the coins that we do have are recirculating into our drawer through that roundup jar, which is working nicely.”
Some people don’t have access to bank accounts or to credit or debit cards. For them, cash is the only form of payment available. The Federal Reserve estimates that 6% of adults in the U.S. do not have a checking, savings, or money market account. Another 16% have a bank account but also use alternative financial services, such as pawn shops, title loans, or check cashing services.
That’s why it’s important to get more coins into circulation, the U.S. Mint said in its statement.
“We ask that the American public start spending their coins, depositing them, or exchanging them for currency at financial institutions or taking them to a coin redemption kiosk,” the statement said. The statement noted that the Mint has been back at full production since mid-June and made nearly 1.6 billion coins that month.
“The coin supply problem can be solved with each of us doing our part,” the Mint said.
