Apparently, coins are turning into the new toilet paper as a nationwide shortage of physical coin is starting due to trickle down effects from COVID-19 pandemic. Due to Coronavirus, the United States is facing a shortage of coinage in circulation. Although seemingly rare, this problem occurs every few decades. During times of war, shortages of the 60's or even the 1974 shortage caused by the hoarding of pennies.
Banks and even grocery stores around the Flathead Valley are struggling to keep change stocked in their teller drawers. Some places like banks can simply refuse customers change when they ask for it. Places like grocery stores however are being forced to ask customers who are paying cash for exact change, or asking them to simply round up the purchase. This problem is not hitting all businesses equally, as some have coinage saved up.
The cause of this shortage is mainly due to less circulation of coinage. People staying at home has made it more rare to keep change in your pocket. Coin machines in stores such as grocery stores or Walmart have seen decreased traffic as well. Further, the U.S. Mint had not been producing nearly as many coins as usual in order to try and protect the mint employees. Many of the Mint's locations were slowed down or even closed during the peak of the Coronavirus. Federal Reserve Chair Jerome Powell said "The flow of coins through the economy ... kind of stopped."
To combat the problem, the U.S. Mint is increasing coinage production and is working with the Federal Reserve in order to stop a shortage of coinage. The Fed has also began to put limits on the amounts that depository institutions are allowed to request in coinage. This is likely the reason why banks across the valley are struggling to get coins. It is unclear how long the shortage will affect us and how long it will take for people to start spending their coins again!
If you should need any small amounts of quarters or other change to get by or do laundry, please feel free to swing by Coins and Carats! We are happy to exchange at this time, and are located in Downtown Kalispell. Come check out the store at 237 Main St.
Below is the full statement from the U.S. Federal Reserve:
Temporary coin order allocation in all Reserve Bank offices and Federal Reserve coin distribution locations effective June 15, 2020
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. Federal Reserve coin orders from depository institutions have begun to increase as regions reopen, resulting in the Federal Reserve’s coin inventory being reduced to below normal levels. While the U.S. Mint is the issuing authority for coin, the Federal Reserve manages coin inventory and its distribution to depository institutions (including commercial banks, community banks, credit unions and thrifts) through Reserve Bank cash operations and offsite locations across the country operated by Federal Reserve vendors.
The Federal Reserve is working on several fronts to mitigate the effects of low coin inventories. This includes managing the allocation of existing Fed inventories, working with the Mint, as issuing authority, to minimize coin supply constraints and maximize coin production capacity, and encouraging depository institutions to order only the coin they need to meet near‐term customer demand. Depository institutions also can help replenish inventories by removing barriers to consumer deposits of loose and rolled coins. Although the Federal Reserve is confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns, we recognize that these measures alone will not be enough to resolve near‐term issues.
Consequently, effective Monday, June 15, Reserve Banks and Federal Reserve coin distribution locations began allocating coin inventories. To ensure a fair and equitable distribution of existing coin inventory to all depository institutions, effective June 15, the Federal Reserve Banks and their coin distribution locations began to allocate available supplies of pennies, nickels, dimes, and quarters to depository institutions as a temporary measure. The temporary coin allocation methodology is based on historical order volume by coin denomination and depository institution endpoint, and current U.S. Mint production levels. Order limits are unique by coin denomination and are the same across all Federal Reserve coin distribution locations. Limits will be reviewed and potentially revised based on national receipt levels, inventories, and Mint production.
To learn more about the Federal Reserve’s role in coin distribution, visit the Federal Reserve Board of Governors (Off-site) website. To learn more about coin ordering and depositing at the Federal Reserve, click here.