The Other Side of the Coin
When social distancing restrictions were enacted back in March, many consumers began using credit and debit cards as their primary method of payment to avoid contracting the virus. With banks, retail shops, and laundromats closed, coins stayed in consumers’ pockets and rainy-day jars. Last month, it came as no surprise that the Federal Reserve said the pandemic had “disrupted the normal circulation pattern for U.S. coin.”
“In the beginning of 2020, more than four billion coins were deposited, or recirculated each month,” says President/CEO of the Minnesota Bankers Association Joe Witt. Once the pandemic had taken hold, that number was cut in half, with less than two billion coins being recirculated in April.
While many pundits describe the lack of coins in the economy as a shortage, it really is an issue of circulation. Recirculated coins are the backbone of the coin economy, as they represent more than 80 percent of the coin supply. With businesses beginning to reopen, many retail firms have increased demand for coins, but these mostly remain with consumers. With many consumers shifting their purchases to online or curbside pickup coins have become a rarity in everyday shopping.
Of course, larger corporations are seeing a rise in sales due to online numbers, but smaller businesses are still suffering from coin circulation problems. Some small businesses don’t accept electronic payments, making their only source of income cash. Without proper change in circulation, the stores can have trouble producing successful transactions.
How can you help get coins back into circulation as a consumer? Witt says that consumers should “keep a couple dollars of change handy in their pockets or purses.” Another tip is to cash in coins that you’ve saved. This directly puts more coins into circulation.
Some local banks have coin counting machines for consumers, or you can ask if they are accepting rolled coins. Using exact change will also help put more coins into circulation. There likely won’t be long-term consequences to the coin circulation problems because the issue is directly related to Covid-19 business and bank closures, according to Witt.