You may have recently noticed a couple of businesses asking for customers to use exact change or electronic payment because of a coin shortage. This is a little misleading as there is not a shortage of coins but a lack of circulation with those coins.
COVID-19 has presented many issues for people. One of those was toilet paper and now the trending topic for a shortage could be U.S. coins.
“The U.S. Federal Reserve is experiencing a coin shortage. Please use correct change or other form of payment if possible. We apologize for the inconvenience,” that is what the signs say when walking into select retailers in Burnett County and across the country.
But is there a shortage?
Ted Gerber of Community Bank explained to the Sentinel that the Federal Reserve is not running low on coins, instead, the issue is the coins are not remaining in circulation.
“During COVID people stopped using coin,” Gerber said. “People held onto their coin and it was not circulation.”
Gerber pointed out that the Community Bank lobbies were closed for weeks which meant people could not go into the bank and cash in their coins.
Banks need these coins and Community Bank has announced they are waiving the 10% fee they usually charge non-customers for cashing in coins in July.
Other areas of the economy that were closed during the beginning of the pandemic were laundromats. Gerber said a lot of circulation occurs at places like laundromats and when those businesses are not circulating the money it becomes stagnate.
The U.S. Federal Reserve does play a role in this. Banks ask the Federal Reserve for coin, until recently those requests were filled without incident – that has changed.
“We asked for $5,000 in quarters and got $1,000,” Gerber said. “Before the pandemic there would be no issue in getting $5,000.”
Gerber added that there were articles written on a national level on stockpiling change that also could have led to the perceived shortage.
“People would come in and say they need $20 in quarters or $50 in quarters and then they would sit on their shelves,” Gerber said. “It was a silly premise.”