Coins have been creeping back into circulation after a shortage earlier in the year — brought on by the coronavirus pandemic — left banks and retailers scrambling to make change for customers.
But while the situation is improving, some members of a federal task force that
“We do feel it has improved since the task force has started,” said Sherri Reagan, the chief financial officer of North Salem State Bank and a member of the working group. “What we don’t know is what the coin circulation will be during the holiday shopping season. That’s a real concern.”
The task force includes representatives from the Federal Reserve, the U.S. Mint, the armored car industry, retailers like Walmart and banks of various sizes from JPMorgan Chase to the $480 million-asset North Salem State Bank in Indiana.
A Fed spokesperson said the coin circulation issue is improving but not yet fully resolved. A stream of steady deposits from coin gatherers and increased production from the U.S. Mint has allowed the central bank to remove caps on the amount of pennies and quarters financial institutions can order, the spokesperson said. The Fed has also raised limits on the amount of nickels and dimes that can be ordered, but a cap does remain for these coins.
The U.S. economy has an estimated $40 billion of coins in supply. A healthy circulation depends on a cycle of commerce that had largely gone unnoticed until the pandemic. The U.S. Mint controls production, and the Fed controls distribution to banks. Banks keep coins on deposit at the Fed and can order more as needed to distribute to businesses that give out change on transactions at cash registers.
When lockdowns went into place to curb the spread of the coronavirus, consumers largely stayed home and relied on online orders for groceries and other necessities. Coins that would otherwise have cycled back into businesses instead remained in piggy banks, so when the economy did reopen, change suddenly became scarce. It wasn’t uncommon to see signs at convenience stores and coffee shops asking customers to use exact change or to pay with a credit or debit card.
Hannah Walker, the vice president of political affairs at the Food Industry Association and a member of the federal coin task force, said the issue is of particular concern in areas with a large population of “underbanked” grocery shoppers, who rely on cash to make purchases.
“While coin circulation is improving, our members are still experiencing lingering challenges in getting a full coin supply into their stores,” Walker said.
The issue is still enough of a problem that the House of Representatives passed a bill on Wednesday night by a 343-41 vote that would allow the U.S. Mint to change the metal recipe in order to boost production.
A spokesman for Rep. Mark Amodei, a Nevada Republican who sponsored the bill, said the U.S. Mint is supportive of the legislation and the agency’s legislative staff helped with language in the proposal.
The issue of how coins are made can be a sticky one, though. Not only do certain metal industry lobbying groups want to preserve the current mix that the U.S. Mint uses, but banks and retailers may have to replace sensitive counting machines if a new vintage of coins isn’t compatible.
Sens. Maggie Hassan, D-N.H., and Mike Enzi, R-Wyo., have sponsored companion bill and are working to move it through the chamber “without delay,” Amodei’s spokesman said.
But it’s unlikely for the bill to have an impact anytime soon even if it passed the Senate and is signed into law. The task force and participating banks are still running campaigns to urge customers to deposit coins where they can. The Fed is still working on when to lift limits on coin orders in the fairest way possible, especially for the holiday season, a spokesperson for the central bank said.
“We still feel like the coin is just in the customers’ hands and they have to get it to the bank,” Reagan at North Salem State Bank said. “It’s still stuck on the ground floor, if you will.”
