From the long list of pandemic-related financial woes, a lack of coins might not be at the forefront of many people’s minds. But it’s the latest sector of the economy to be struck by COVID-19.
Banks across the nation are facing shortages of pennies, nickels, dimes and quarters. The U.S. Mint produced less coins this spring to help protect employees from infection, and the Federal Reserve — which supplies banks — has been rationing supplies as the normal chain of distribution has been disrupted.
“With the partial closure of the economy, the flow of coins through the economy has gotten all…it’s kind of stopped,” Federal Reserve chairman Jerome Powell said during a virtual hearing with the House Financial Services Committee last week. “We are working with the Mint and the Reserve Banks and as the economy reopens we are starting to see money move around again.”
Due to this reduction in supply, local banks — which supply businesses with coins — are encouraging folks to clean out their pockets, drawers and piggy banks to prevent any further restrictions or unfavorable measures—like forcing businesses to round up or down to the nearest dollar.
“We’re just trying to manage this in front of us,” said Sara Miller, community banking president at Old National Bank, who recommends that folks interested in exchanging coins call ahead to verify if their closest branch has a coin counting machine.
The coin drought has prompted some local businesses to be proactive. In Owensboro, Meijer recently restricted self-checkout lines to credit and debit cards only.
The situation might seem odd given that more Americans are voluntarily avoiding cash transactions, citing health concerns, in favor of cards or online shopping, even for groceries.
It is not a new trend. Last year, circulating coin shipments to the Federal Reserve Bank decreased by 8.8 percent from the previous year to a total of 12.5 billion coins. And unit costs for pennies, at 1.99 cents, and nickels, at 7.62 cents, remained above face value for the 14th consecutive fiscal year, according to the 2019 annual report from the U.S. Mint.
Countries like Australia, Brazil and Canada have even abolished the penny due to the economic and ecological impacts related to the mining, smelting, minting and trucking of coins.
But cash and coins remain a significant part of the U.S. economy. A 2016 Gallup survey found that about one in four Americans complete all or most of their purchases with cash and about 40 percent use cash sometimes. And while many businesses are transitioning towards digital transactions, they face smaller monthly fees when customers complete purchases with cash.
In the region, there are still a lot of coins in circulation.
Old National Bank’s 35-branch operation in western Kentucky and southern Indiana purchases $100 of pennies, $100 of nickels, $500 of dimes and $1,500 of quarters every week, on average. That equates to 23,000 metal coins.
“The reliance on coin is still substantial,” Miller said. “There are still a lot of businesses that rely on currency transactions.”
