Signs have been popping up at retail stores asking for exact change due to a coin shortage. Some retail stores have been asking customers to pay with a debit or credit card only and not use cash at all. So, is there a coin shortage?
Ricky Pugh, a senior Vice President at Peach State Bank in Gainesville, says there really has been a coin shortage and most of it is to be blamed on the pandemic. “The federal reserve created a coin shortage when the pandemic started, but they are releasing more coins to the banks on a weekly basis,” he says.
How can a pandemic cause a coin shortage? Pugh spoke on WDUN’s Newsroom Tuesday night, explaining exactly how this happened. He says basically the federal reserve had to shut down just like lots of other places. “For some period of time, basically about a year, they didn’t have any employees in there rolling coins, so the only shipments we were getting was the rolled coins we already had in inventory, limiting the amount we could get each week.”
For example, Pugh says on average the bank typically receives around $3-4,000 in quarters a week. Once the reserve shut down, the bank was limited to just $1,000 in quarters a week. It wasn’t just quarters that were being limited, but all coins. “We had to turn around and start limiting our customers and ration those out to take care of everyone, like our merchants.” He says that rationing is what forced merchants to start promoting debit and credit cards.
It didn’t help that people were more wary of cash during a pandemic. He says that customers stopped coming into the bank bringing in their coins to exchange for cash. Also, people wanted to use their debit and credit cards for safety reasons. While that might mean less coins needed, that also meant less coins in circulation.
At Peach State Bank, Pugh says they are starting to see a slight improvement in the situation. He says they are now being allotted more coins, but they are still not back to getting a “normal” amount. He says they are still just getting about half of what they used to receive, but he is encouraged to see the numbers of coins they are allotted increase. “If the numbers keep going down in the pandemic, I see that we will get back to normal, where banks will be able to order whatever number of coins we want, and we should be able to receive those,” says Pugh.
Pugh says that a small percentage of the population still carries around a few bills in their wallet, but many others are moving away from cash entirely. “More and more people are using their debit cards today. Some of the older generation still uses cash, but your 60-year-old person and down in age uses their debit card 100% of the time.”
As for going completely cashless, Pugh predicts that’s a long way away, if ever. “There’s always going to be a need for cash to be there.”