The impact of COVID-19 has resulted in the disruption of billions of coins used in daily transactions every year. That impact has not been lost on retailers and restaurants in southern Utah, where signs are popping up in take-out windows and businesses across the region.
These sentiments were echoed in a statement calling for the public’s help in stemming the shortage by “using exact change when shopping, taking your coins to financial institutions or handing them over for cash at recycling kiosks.” of coins ”to put coins back in motion, United States Mint’s director David J. Ryder said in a press release.
According to Ryder, the shortage “is not a coin supply issue. It’s a traffic problem. ”
Simply put, although there is an adequate supply of coins in the economy, the slower pace of circulation has reduced the supply which is readily available where it is needed.
In short, the flow of coins from government to banks, from banks to businesses, from businesses to customers, and from customers to banks has all but ceased, interrupting almost every link in the chain of circulation, not just to the United States. United but also in other countries.
Where have all the pieces gone
To some, the coin shortage issue can seem confusing, as coins are in circulation and not consumed. Under normal circumstances, a majority of the coin supply is put back into circulation on a daily basis, but that all changed with the onset of the pandemic.
It started with a significant reduction in retail activity and a drop in the number of coins deposited by third-party coin processors, both of which represent the replacement of the bulk of coins in circulation.
Next, the Mint put measures in place to mitigate the spread of the virus and protect its employees by making temporary downsizing.
With that in mind, coins have a life expectancy of around 30 years, but every year coins are lost or thrown away. Some are thrown down the drain by mistake, or so worn out that they are no longer useful. To make up for the loss and meet the increased demand, around 12 billion new coins are issued each year.
Since the Mint was operating with fewer employees, production plummeted, so by early May the number of coins produced fell by around 1 billion.
At the same time, the National Institute of Health announced in March that the virus “was detectable for up to four hours on copper” and other metals. Next, stores recommended by the Centers for Disease Control and Prevention use contactless payment options. Additionally, the Federal Reserve told Reuters that bills from Asia were quarantined before they circulated, which has led to an increase in contactless payment methods – meaning no cash or the rooms.
There is also the large stock of coins held by the public which usually represents a constant flow of coins that are returned to the banking system. But with the skyrocketing use of debit cards and an economy that has come to a standstill, this channel of circulation has also dropped significantly.
With these conditions still present, businesses began to reopen in June and the number of coin orders began to increase, but the Mint was still operating at lower production levels.
To complicate matters further, that same month, the Federal Reserve, the agency that manages the circulation of coins, reported declining coin inventory levels with fewer coins in circulation from the public.
To fill the gap, the Mint has been operating with all hands on deck since mid-June, minting nearly 1.6 billion coins in that month alone, and is on track to produce 1.65 billion coins per months for the rest of the year. By comparison, in 2019, the Mint produced an average of 1 billion coins per month.
Mint employees “work as hard as they can to get the newly produced coins into the economy,” Ryder wrote. In fact, the agency is on track to mint more coins this year than it has produced in nearly 20 years.
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