According to the Federal Reserve, the coronavirus pandemic has caused a nationwide coin shortage. It’s the new challenge faced by Americans. The US Federal Reserve has worked with the US Mint to boost supply and prompted to ration distribution.
Shortage Of Coins: A New Challenge For The USA
Reserve Chair Jerome Powell said Wednesday that the shutdowns caused by the pandemic have raised concerns about the circulation of coins, which the Fed’s 12 regional banks are in charge of supplying to commercial banks.
“With the partial closure of the economy, the flow of funds through the economy has stopped,” Powell said 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. We all don’t want to wake up to headlines in the near future such as ‘Banks run out of money. Banks don’t know what to tell their customers.”
He made the remarks in response to a question from Tennessee Congressman John Rose, who said a bank in his district told him it would run out of coins by the end of the week because the Fed was only sending a portion of its usual order of coins.
COVID-19 has Disrupted the Supply Chain
The main reason behind the shortage is the significant disruption caused in the supply chain and normal circulation pattern for US coin by this COVID-19 pandemic. After the Coronavirus breakout, 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.
Jerome Powell, the Chair of the US Federal Reserve addressed the issue on Wednesday and said that “I am well aware of this issue and believed that it would be temporarily. We feel like we are making progress.” The Fed on Monday told banks it is working with the Mint to increase supply, but that until the shortage can be cured would limit the number of pennies, nickels, dimes, and quarters it sends to them “to ensure a fair and equitable distribution of coin inventory.” Allocations will be based on banks’ historical patterns of coin orders, it said. Because of the concern of spreading the virus, many businesses and experts have encouraged consumers to use contactless payment systems.
This avoids the spread of viral infections through cash and credit cards. Along with coins, the pandemic caused the shortage of hand sanitizer, toilet paper, disinfecting wipes, meat, and yeast.
The United States has reported 2.32 million COVID-19 cases. 122K people have died due to COVID-19 in the USA. The pandemic has resulted in a big shock and shortage of the US economy that anyone has ever seen in their lifetime.
More than 33 million Americans have lost their jobs in the last two months and this has bought the US economy to a standstill. Now the economy is gradually turning back on from the recession that has entered in February. The economic panel has reported that this was first in history since 2009. The World Bank has also said that the pandemic could result in a sharp rise in poverty levels. The shortage of daily using items will be a sign of this rise in the poverty level.