The coronavirus pandemic has had a multifaceted impact on society. It has had a dire impact on public health, killing more than 200,000 Americans. It has plunged the United States and world into an economic recession. But perhaps most bizarrely, the United States has experienced a coin shortage. The coin shortage has a two fold cause.
One cause of the coin shortage is the closure of in person stores. For the time that lockdown was implemented, people only shopped online or in grocery stores at the minimum. This resulted in a diminished circulation of coins in the United States as most people were purchasing things on either debit or credit.
Secondly, the coronavirus forced the federal reserves minting facilities to close as well. As such, the production of coins fell.
These factors when occurring at the same time resulted in a limited supply of coins. However, the shortage arose as the demand for coins skyrocketed when the economy reopened. Jerome Powell, the chairman for the Federal Reserve commented that “with the partial closure of the economy, the flow of funds through the economy has stopped, 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.” The question then becomes: how are businesses dealing with the shortage?
The solution for many businesses has been a relatively simple one. Most companies are requesting the people pay for their goods on debit, credit, or with exact change. Though some companies, most notably Amazon, are trying to provide incentives for people to use their coins.
Typically, coinstar machines charge a fee for using the service that counts coins, however, Coinstar says it will waive the fee if people select the option to have their funds converted to an Amazon gift card. This is a big deal as the percentage cut Coinstar machines take can amount to up to 11% of the total. Forgoing the fee incentives people to cash in their coins. Other companies using this system include Lowes and Krispy Kreme.
The hopes are that if enough people take their loose change to coinstar machines, then the coin shortage will be successfully mitigated. The coin shortage is an interesting dilemma as is a direct, but somewhat unexpected result of the coronavirus pandemic. Helping to bring more coins into circulation will make businesses operate more smoothly and assist in helping to rebound the economy.