Photo by Artem Beliaikin on Unsplash Production of boiler chickens (those raised for their meat, not eggs) in the US...
United States Unexpectedly Faces Shortage of Coins
The United States is unexpectedly facing a shortage of coins across the country. Banks and businesses are reporting a dramatic decrease in the circulation of coin. The decrease in the coin supply is based on the partial closure of the economy and reduced coin production by the U.S Mint. The flow of coin throughout the economy has halted. Due to the coronavirus pandemic, there has been a reduction in economic activity. As consumers adhere to stay-at-home orders, fewer physical purchases are made. According to USA Today, to stimulate the economy the Federal Reserve began printing dollars at an unprecedented rate. These dollars were added into circulation in order to increase economic activity. Unfortunately, there was not an equitable amount of increased coin production.
MSN reports, the U.S. Mint actually reduced production of coin in order to protect their employees during the pandemic. In response, the Federal Reserve began to ration its distribution of coin. The Federal Reserve placed a smaller limit on how much coin banks will be given. This shortage has resulted in some businesses no longer accepting cash as payment, because they cannot provide change. It is also reported that businesses are buying coin from their customers. The National Association of Convenience stores states that gas stations and convenience stores have been heavily impacted by the shortage. Annually, gas stations and convenience stores account for over 165 million transactions and rely heavily on cash and coin. Currently, they are receiving only a fraction of their normal coin intake.
The U.S Mint also notes a reduction in deposits received from third-party coin processors as a reason for the surge in coin demand. State officials are classifying this shortage as an emergency and are calling for the Federal Reserve to release coin from its inventory holdings. In a global pandemic, reduction in ways consumers can conduct transactions is very problematic. It also heavily impacts low income communities who many not have alternate forms of payment. The U.S. Mint responded by implementing a task force strictly geared toward reducing the disruption of coin flow and expects to continuously increase coin production until demand is met.
Discussion Questions:
- Explain the impact of the coin shortage on our economy’s ability to recover from the COVID-19 pandemic.
- What are the three main roles of the Federal Reserve? Discuss the importance of each role.
Sources: MSN “Americans face new coranavirus challenge: A shortage of coins” by Ann Saphir; USA Today “US is `printing’ money to help save the economy from the COVID-19 crisis, but some wonder how far it can go” by Brent Schrotenboer.
