The current coin shortage has impacted more than just laundromats and vending machines. For the last several months, small businesses have been struggling to stay open during the COVID-19 pandemic. This is partly due to the temporary closure of US Mint facilities. However, the reason for this coin shortage is not due to a supply problem according to the Mint. They claim it is a circulation bottleneck that requires help from the public. The Federal Reserve even created a US Coin Task Force in July to combat this issue by facilitating the flow of coins.
Interestingly, this coin shortage is not the first in US history. However, Michael White, a spokesman for the US Mint believes “There is no comparison to previous events” (Washington Post 2020). One of the first notable coin shortages in US history occurred in 1873 when the Mint announced they would be moving to the gold standard and away from silver, which triggered a drop in silver prices as miners were turned away from bringing their silver bullion to be minted. The second most notable, and more recent coin shortage occurred in 1965 when President Lyndon B. Johnson announced a change in the silver content of coins to combat a declining silver supply. This resulted in many Americans hoarding coins with higher silver content (US Money Reserve 2020). As small business owners are struggling due to this current shortage, some are turning away customers who cannot pay with exact change. Other business owners are rounding up their prices to increase sales. Federal Reserve Chair Jerome H. Powell expects the matriculation of coins to increase as the economy begins to reopen (Washington Post 2020). Additionally, the Mint is ramping up production and is estimating the total production of coins in 2020 to reach around 14-19 billion. This is a significant increase from just 11.9 billion coins produced in 2019 (Fortune 2020).
As COVID-19 presents Americans with new obstacles, some are adapting to this challenge by turning to online transactions or debit cards in order to avoid handling coins. It also seems to be too early to tell if this shortage was caused as a direct result of the pandemic, or if COVID-19 is just another factor contributing to an issue that was expected to happen eventually. For the last several years, the production of circulating coins has started to decline (Washington Post 2020). It will be interesting to see where the country goes in terms of coin production in the future and how that may impact transactions on a global scale. For now, working on personally pushing coins back into circulation should be the main priority.
Original article: https://www.washingtonpost.com/business/2020/09/01/coin-shortage-pandemic/