Now is a good time to put the contents of that coin jar back into circulation.
One effect of the economic slowdown ushered in by the COVID-19 pandemic is a coin shortage, which affects banks’ ability to provide them to businesses.
Chris Valerio of White Cup Espresso in Sequim said Friday his bank allowed him only one roll each of quarters, dimes, nickels and pennies when he made his weekly request for coins last week.
He worries that he won’t be able to do business.
“That won’t even last me two hours,” he said. “I won’t be able to make change.”
The Federal Reserve began rationing coins on June 15. With less business being done as businesses shut down and customers stayed home, fewer deposits have been made to banks and less has been shipped to the Federal Reserve, it reported June 11.
At the same time, coin production by the U.S. Mint, which is the country’s issuing authority for coins and determines annual coin production, also decreased due to measures put into place to protect employees.
The result: the Federal Reserve’s coin inventory has been reduced to below normal levels and the flow to the nation’s banks has slowed to a trickle. Banks in turn, are rationing coins to customers.
“I feel bad for business customers who go through a lot of coin,” said Dawnya Scarano, senior vice president director of retail banking for First Federal (not Valerio’s bank.) “There are a few that have high volumes.”
The Washington Post reported that Fed Chair Jerome H. Powell told the House Financial Services Committee June 17 that as the economy ground to a halt, “the flow of coins through the economy has gotten all – it’s kind of stopped.
“The places where you go to give your coins, and get credit at the store and get cash — you know, folding money — those have not been working. Stores have been closed,” Powell said, describing it as a temporary issue.
“So the whole system has kind of, had come to, a stop,” he said. “We’re well aware of this… . As the economy reopens, we’re seeing coins begin to move around again.”
The Fed “is working on several fronts to mitigate the effects of low coin inventories,” it said, according to The Washington Post. That includes working with the mint to reduce supply issues and maximize production capacity, along with encouraging depository institutions to order only the coins they need to meet short-term customer demand.
It is not known when the situation will be remedied.
Scarano said that First Federal — which is based in Port Angeles and has branches in Sequim, Port Townsend and Forks as well as in Bainbridge Island, Bellingham, Silverdale and Seattle — is fortunate in that most of the branch lobbies still have coin machines, something that many banks removed in years past.
“We are using those to supplement our supply, ” she said, so as to “minimize coin disruption.”
The coin shortage is part of a larger picture of the tremendous economic strain created by the pandemic.
The Fed has ordered the country’s 33 biggest banks, including JPMorgan Chase, Wells Fargo and Bank of America, to suspend their stock buyback programs and limit dividend payments to shareholders in the third quarter, the first time it has made such a move since the Great Recession, The Washington Post reported Thursday.
The banks must also submit new plans for maintaining enough of the capital needed to survive a downturn, the Post said.
However a Fed analysis of the banks’ finances showed that they are in good shape now, it was reported.
“The banking system remains well capitalized under even the harshest of these downside scenarios — which are very harsh indeed,” Fed Vice Chair Randal Quarles said in a statement.
As regards the coin shortage, North Olympic Peninsula residents can help out by checking with their local banks to see if they can exchange the coins building up on their dressers, in purses and piggy banks for folding money.
“It would help to put coins in the banks for the banks to put back into business customers’ hands,” Scarano said.
Or, she suggested, customers could just give coins to their favorite retail establishments to support them during a hard time.
“They could donate coins to local businesses,” Scarano said.
“How cool would that be?”
Executive Editor Leah Leach can be reached at 360-417-3530 or at [email protected]