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By: David M. Higgins II, Publisher
Mechanicsville, MD- When the Coronavirus Pandemic first began to shut down businesses in March 2020, toilet paper, disinfectant, masks, and other safety equipment came in short supply. However, there is now another shortage due to those restrictions and shutdowns: coins.
Last month, the Federal Reserve warned that the pandemic “significantly disrupted” the supply chain for coins. The U.S. Mint cut production to keep workers healthy and safe, while many people stopped paying with cash because most businesses were closed down.
As non-essential businesses were forced to shutter throughout the country it created a ripple effect in the national movement of currency. Typically you will have a business going to the banks several times a week to deposit money. But with non-essential businesses closed, the deposits were not being made for almost two months.
“With the partial closure of the economy, the flow of funds through the economy has stopped,” Federal Reserve Chairman Jerome Powell said before Congress last month. “We are working with the Mint and the Reserve Banks, and as the economy reopens, we are starting to see money move around again.”
There is also another big part of the coin circulation that was hit, coin depositories, like CoinStar.
“I don’t know if I would refer to it as a coin shortage,” CoinStar CEO Jim Gaherity began. “There are billions of dollars of coins out in America, it’s just not in the right place for use at this point and time, “ he continues.
“The US Mint produces three-and-a-half times less than Coinstar re-circulates in any given year,” Gaherity added. Through their 17,000 plus locations across the nation, Coinstar allows customers to exchange their coins for bills. The change is then sorted, and deposited with financial institutions like the Federal Reserve bank so it can once again jingle in the pockets of consumers.
As a result, some businesses say they are low on change. The convenience store chain Wawa, for one, is asking patrons of its 850 outlets to use exact change, or else pay with a credit or debit card, or by using the company’s mobile app.
Other retailers, including CVS pharmacies and discount chain Dollar Tree stores, have implemented similar policies, citing coin shortages, according to local reports.
There is growing concern that coronavirus will force society to rely more on cards and digital transactions and will make it harder on vulnerable groups, like the elderly who may not have those means to pay. “Not everyone has a bank account,” Dr. Danielle Ompad, an epidemiologist at New York University’s School of Global Public Health, told CBS MoneyWatch in March. “There are some very important equity issues if we start encouraging cashless transactions.”
The Fed added that it is working with the Mint to increase production capacity, and believes coins in circulation will return to normal levels once more businesses begin to reopen. So far in 2020, the U.S. mint has produced 6.5 billion coins, including more than 1 billion quarters.