Why is There a Coin Shortage?

Amidst the pandemic and the changes to normalcy, one factor that’s generally gone unnoticed is COVID’s contribution to the coin shortage in the United States. This is just one of a long list of ways that COVID-19 and its subsequent shutdowns have threatened the American economy.

Alongside the obvious causes, like the shutdowns that left online shopping, paying, and ordering the primary outlet for consumer activity for an extended time. The significant reliance on debit and credit cards to avoid the spreading of germs associated with cash and coins caused the United States Mint to reduce its staff

In response to the coin shortage, businesses all over the country have been requesting that patrons pay with cards or exact change. Although the United States Mint has since returned to functioning with its full staff, and the strength of coin numbers is regaining steam, it is not yet back to normal.

Misconceptions About the Coin Shortage

In general, the assumption surrounding the coin shortage was that fewer coins were being circulated, which is a misconception. According to the Federal Reserve, the true cause is decreased consumer use of coins in the last 18 months. 

This is largely a result of the initial shutdowns that left many businesses in which coins would frequently be used for payment closed to the public and unable to accept cash transactions. Additionally, even once some of these businesses were able to reopen to the public, many requested payment with credit or debit cards to further avoid the spread of germs associated with paper cash and coins.

This is problematic and causes issues for our economy for several reasons. The portion of Americans most negatively impacted by the coin shortage are people who don’t use banking systems. Small businesses are also hit hard, as they lack the systems of larger corporations that can find and fund solutions to the coin shortage.

Solutions to the Coin Shortage

To resolve the American coin shortage earlier in the pandemic, the Federal Reserve announced its U.S. Coin Task Force. This task force consisted of representatives from the Federal Reserve, the United States Mint, the American Bankers Association, and others from coin aggregator and retail industries.

This initiative acknowledged its confidence that the reopening of the economy would likely solve the shortage in time. However, most believed that a solution for the shorter term was still necessary. Because of this, the task force set out to allocate its available coins to banks and other financial institutions as needed and based on previously reviewed orders. Additional measures have been taken at different points during the pandemic, like the limits on silver coins while demand is soaring and supply hasn’t been able to keep up.

As consumers, we can help solve the coin shortage in our everyday lives. If you’re one of those consumers who primarily make purchases electronically and virtually, the coin shortage may not even be on your radar. However, if you regularly use cash and coins, consider scavenging through your pocket change and adding your coins to circulation wherever possible.