The Federal Reserve says that the COVID-19 pandemic has created a nationwide coin shortage.
According to Jerome Powell, the reserve chair, the shutdowns caused by the pandemic have raised major concerns about the circulation of coins. The Fed’s 12 regional banks are in charge of supplying coins to commercial banks.
“With the partial closure of the economy, the flow of funds through the economy has stopped,” Powell stated on Wednesday during a virtual hearing with the House Financial Services Committee. “We are working with the Mint and the Reserve Banks and as the economy re-opens we are starting to see money move around again.”
In a statement, the Reserve said that Reserve Banks and Federal Reserve coin distribution locations began temporarily allocating coin inventories sent to banks across the nation on June 15.
Banks around the U.S. are running low on nickels, dimes, quarters, and even pennies. And the Federal Reserve, which supplies banks, has been forced to ration scarce supplies.
“The COVID‐19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin,” the statement said. “In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly and the U.S. Mint’s production of the coin also decreased due to measures put in place to protect its employees.”
“It was just a surprise,” says Gay Dempsey, who runs the Bank of Lincoln County in Tennessee, when she learned of the rationing order. “Nobody was expecting it.”
Dempsey says that her bank typically dispenses 400 to 500 rolls of pennies each week. Under the rationing order, her allotment was cut down to just 100 rolls. She adds that there were cutbacks on nickels, dimes, and quarters as well.
That shortages cause major issues for Dempsey’s business customers, who need the coins to stock their cash registers.
“You think about all your grocery stores and convenience stores and a lot of people that still operate with cash,” Dempsey said. “They have to have that just to make change.”
Businesses and experts have been encouraging consumers to use contactless payments since March because of concerns about the spread of the virus through cash.
Coins now join the growing list of shortages caused by the coronavirus. That list includes toilet paper, hand sanitizer, disinfecting wipes, meat, and yeast.