Why America Is In The Middle Of A National Coin Shortage During A Pandemic
If you’ve been to local fast food restaurants or eateries, or even been following your local news lately, you’ve probably seen signs posted outside of businesses asking consumers to pay with exact change, exchange their coins for paper bills, or to use their debit/credit card. There are a few reasons why there is a coin shortage, and they are all linked as an effect from the pandemic.
First, the U.S. Mint, which is coin production, had been working at a limited capacity due to employee safety precautions. Another reason is a lot of coins currently circulating have been locked up in homes due to many Americans staying indoors and ordering online purchases with credit cards out of fear of contamination.
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Small businesses that sell their goods for less than $10 like coffee shops and bakeries, have either closed down or restricted payment methods. From individuals not exchanging their coins for cash at the bank, and many not using the coin kiosks inside grocery stores, this led to an even bigger reduction of the number of coins that banks send to the Federal Reserve, which manages the distribution of coins around the country. “There’s enough coins, but it’s not circulating at the speed it was circulating before,” says Senay Agca, a finance professor at the George Washington University. To keep things simple, it’s referred to as a coin shortage.
The coin shortage could ultimately hurt Americans who use cash for majority of their purchases. If they don’t have exact change at hand for essential purchases, it could be more stressful to round up or donate change to businesses. Small businesses have also been at risk and hurting. Customers have the option to change their mind if they don’t feel like searching for exact change. “If they can’t hand back exact change or if they insist you must pay exact change, they’ll lose customers,” says Venky Shankar, a marketing professor at the Center for Retailing Studies at Texas A&M University.
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Since June, the U.S. Mint has been operating at normal levels again, with safeguards in place for the protection of workers. With 1 billion coins normally getting produced each month, the U.S. Mint is on track to produce 1.65 billion every remaining month of 2020. The Federal Reserve have also taken the steps to ration coins, through limiting the amount banks can order from them and urging banks to request only what’s needed. As for the future, we are looking toward a cashless society. Due to the exchange of contactless payments through smartphone and the cleanliness of paper bills, we are now relying on digital payments as a more effective payment method.
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