Coin shortage eases as U.S. ramps up production

To help push more coins into circulation, the U.S. Mint last year boosted production to levels not seen since 2017.

The Mint’s two facilities in Denver and Philadelphia churned out 14.8 billion coins for circulation in 2020, up 26% from less than 12 billion the year before, according to data the agency provided to American Banker.

The effort was part of a plan between the government, coin collection companies, retailers and banks to cure a shortage in tills across the U.S. as in -person spending slowed in the early months of the pandemic and online and card transactions soared. The sudden scarcity of change was one of the unseen economic side-effects of the coronavirus pandemic, but that boost in production, combined with increased economic activity in recent months, means that coin circulation is finally returning to normal, industry officials say.

“Two of the largest banks reported they can now fill merchant coin orders as requested and not send less than what was asked for,” said Jim Gaherity, the CEO of Coinstar, told American Banker in an email.

Banks and retailers were caught off guard in the spring when coin circulation slowed as households hunkered down to reduce the spread of the coronavirus.

The Federal Reserve had to cut orders of coins to banks that pass them along to laundromats and grocery stores that rely heavily on making change for customers. Retailers and banks, meanwhile, had to come up with creative solutions to get coins into circulation.

Alicia Wade, the president and chief operating officer of the $567 million-asset Valliance Bank in Oklahoma City, said the bank ran coin drives within its branches and awarded free lunches to the offices and customers who brought in the most.

“When the Fed limited our coin, based on average of previous years orders, we made adjustments with customers who are high cash users,” Wade said. “Everybody was able to really make adjustments and be nimble in the process.”

The Fed finally lifted its cap on Valliance’s orders six weeks ago, Wade said.

The summer’s coin shortage created significant hardships for many retailers, particularly small grocers and gas stations whose customers often pay in cash. In July, a group of seven retail groups, including the National Grocers Association and the Society of Independent Gasoline Marketers of America, said in a letter to the Fed that the situation had become urgent, as more than 60% of their members’ $800 billion in annual sales are paid for with cash.

The U.S. Mint, which was part of the task force assembled by the Fed and private companies, did its part to get more coins into circulation. The agency has been known to ramp up production to meet demand before. In 2015, the Mint added extra shifts to its production lines as the economy started to accelerate. It did so again in 2020, even as social distancing measures had to be put in place to prevent the spread of the virus.

“The United States Mint has continued to perform its essential mission of manufacturing circulating coins throughout the COVID-19 public health crisis,” a Mint spokesperson said.

Lorrie Trogden, the CEO of the Arkansas Bankers Association, says the situation has improved to the point that banks are now taking in enough coins to sell some back to the Fed.

“I touched base with several bankers across the state and none are reporting any issues with coin circulation, and there are no issues with their coin orders from the Federal Reserve,” Trogden said.