Bank president says it is not ‘shortage’ level locally
From toilet paper to spices, shortages have become commonplace as the COVID-19 pandemic strains supply chains around the country. But the latest hard-to-find item might surprise you: spare change. Are we in the midst of a coin shortage?
On June 11, the Federal Reserve Bank notified banks of a “temporary coin order allocation,” placing strict limits on requests for pennies, nickels, dimes, quarters, half-dollars and dollar coins.
“We became aware of the coin production limits that COVID had caused in mid-June. We chalked it up to an unanticipated byproduct of the pandemic,” said Citizens National Bank President/CEO Jason Smith.
Less than a week later, Federal Reserve Chair Jerome Powell was asked about coin rationing during testimony before the House Financial Services Committee. His response: “…what’s happened is that with the partial closure of the economy, the flow of coins has gotten all — it’s kind of stopped.”
For local banks like Citizens National Bank, Smith says that his bank has not experienced the same level of coin shortage that we are hearing about and seeing around the country.
“We have not experienced the same level of shortage as we are hearing about in other parts of the country. The amount of coin we have is noticeably down, but not to “shortage” levels,” said Smith.
“We are encouraging all our customers to take only what they need and not stockpile more coins than necessary,” he added.
The typical channels that keep change moving in the economy have been shuttered or scaled back by COVID-19. Bank lobbies are closed in many areas. Restaurant and retail cash registers are ringing up fewer cash sales while seeing a shift toward online and contactless payment methods. Many casinos were also affected for some time.
The U.S. Mint — which is responsible for producing coins but not paper money – had scaled back operations to protect employees from COVID-19.
“Like many of the items used every day, coins have a supply chain. Coins are destroyed or mutilated on a daily basis and must be replaced, so when anything disrupts the supply chain a temporary shortage can occur. Just like toilet paper and bottled water, a short term decline in production coupled with a spike in demand,” said Smith.
In his opinion, Smith expects the coin shortage to get back to normal before the end of the year.
“I would expect things to get back to normal before year-end. The steps consumers and businesses are taking to manage the need for coins will help bridge the production gap,” said Smith.
“I would also encourage individuals and businesses to be on the lookout for coin-related scams. Anytime there is a market disruption or a series of them, it is an opportunity for the bad guys to take advantage. It is always good to remember your bank will not call you for help with their coin problem. Be aware of unsolicited phone calls, emails and snail mail,” he added.