The coronavirus pandemic has been rife with market shortages. First it was toilet paper and hand sanitizer, then meat, and now an item that few realized we could run out of. According to the Federal Reserve, the pandemic has caused a shortage of American coins.
Pandemic Procedures Cause Shortage
The coronavirus pandemic has caused a nationwide coin shortage, according to the Federal Reserve. The shortage is affecting pennies, nickels, dimes, and quarters alike. The Reserve explained the issue in the following statement:
“The COVID‐19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin… In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly and the U.S. Mint’s production of coin also decreased due to measures put in place to protect its employees.”
Coin production slowed as a result of safety measures, like social distancing inside mint facilities, in order to protect workers. But the main reason for the shortage is the sudden halt in circulation.
Widespread lockdowns, public safety measures and the huge increase in unemployment have all disrupted cash flow. With businesses closing and people having less money to spend, the circulation of American cash has come to a halt. Contactless payment options have also led to the slowed circulation. The decreased supply of coins from both mints and individuals has left many banks scrapped for coins.
But Jerome Powell, the Federal Reserve Chair, said the institution has started to lend out coin inventories to banks. “We are working with the Mint and the Reserve Banks and as the economy re-opens we are starting to see money move around again,” he explained. Allocations of coins will be based on data about cash circulation. Banks will receive the average amount of coins they dispensed prior to the health and financial crisis.
Are Coins Still Important?
The shortage raises the question of whether we still need coins, or physical money in general. Even before the pandemic, the use of credit cards and mobile payment options were ubiquitous. But during the lockdowns, online shopping and digital banking became near necessities. While the dollar bill isn’t going away any time soon, inflation has made small coins like pennies and nickels almost irrelevant.
If you work at a bank, or behind a cash register in a supermarket, you may have noticed the coin slowdown. But for the rest of us, the shortage may just prove what little use we get from metal coins.