Now we have a coin shortage?
As you may have heard, the country is now facing a coin shortage. Businesses across the country are forcing customers to pay with exact change. How and why did this happen?
According the US Mint there is over 4 billion dollars’ worth of coin in the United States. So how did this happen? How did we run into a shortage? The answer goes back to our spending habits! Since the COVID-19 pandemic hit, people have been forced to stay home, stay inside, and shop online. When you shop online money is transferred electronically. No physical paper or coin is exchanged. This has caused a backlog of our nation’s coin. People are holding onto those coins and they aren’t being put into circulation. The “coin shortage” should be renamed the “coin circulation problem.”
How do banks factor in on US Currency circulation?
Banks get cash from the Federal Reserve. Estimates on how much coin is used in a certain part of the country are determined a year in advance. As we have found out, this equation is not an exact science. Generally, once a shipment of coin leaves the US Mint for a Federal Reserve Bank, the Fed will not receive another shipment of coin for the year. There are 24 regional Federal Reserve Banks across the country. Those banks are in charge of distributing US Currency to commercial banks in their region. The Federal Reserve Banks do not print or stamp currency, but distribute it. So the coin shortage is due to a couple of factors. One, the US Mint has slowed production. Two, the Federal Reserve has less coin to distribute and has to take in account all the banks in the region it serves. Three people are not out spending as much money with actual US Currency.
What may happen in our area?
So far UCB has been able to manage the coin shortage problem by taking care of the coin we have and by being cautious with how we send it out to our customers. We have waived all fees associated with our coin counter for all non UCB customers and we have seen an increase in people coming in and turning in spare change. We will continue to give coins out to businesses and to people as they come in looking for rolls of change.