Coins in short supply across Baltimore area, nationwide as businesses reopen from coronavirus shutdowns
Baltimore Sun - 7/10/20 | Written by: Lorraine Mirabella
Stores have stocked back up on chicken, spray cleaner and paper towels, but consumers may notice a new and less expected coronavirus pandemic shortage, one of pennies, nickels, dimes and quarters.
When businesses, organizations and events abruptly shut down as the pandemic arrived in Maryland and elsewhere in March, circulation patterns for U.S. coins were thrown out of whack along with the rest of the economy.
“This is one of those things nobody really expected,” said Drew McKone, an executive vice president and chief deposit officer at Baltimore-based Howard Bank. “But when you look in the rear view mirror, it makes sense. When the economy shut down and people stayed home, the supply of coin in the market was pretty much choked off.”
Coin deposits from banks to the Federal Reserve fell sharply, and meanwhile the U.S. Mint produced fewer coins as it slowed production to protect workers, the Federal Reserve said. As regions began reopening, banks began ordering more coins from the Fed, further contributing to low inventories. On June 15, the Fed announced limits on coin distribution.
In the Baltimore area, some businesses are more impacted than others and are taking a variety of approaches to manage the shortage. Lowes home improvement stores, for one, is alerting customers and asking for their cooperation.
“The U.S. is currently experiencing a coin shortage,” say signs posted at registers in the chain’s store in Parkville. “Please use correct change or other form of tender if possible.”
Lowes representatives did not respond to requests for further comment.
Similar signs greet customers at Sprouts in Towson. Notices asking for exact change or alerting customers to the shortage have cropped up elsewhere in the area, including in Perry Hall at a Wells Fargo branch drive through and a Royal Farms store.
If coin is unavailable at a particular Wells Fargo branch, customers cashing checks can either deposit the coin amount to their account or give the bank change to round up to the nearest dollar, said Maegan Lewis, a bank spokeswoman.
Stores run by B. Green & Co., including Green Valley Marketplace, Food Depot and Cash & Carry, have kept their supply up thanks to customers who come in to exchange their loose change for cash.
“We are fortunate that we have change redemption stations for customers in all of our locations so we self supply our own change,” said Rick Rodgers, the grocer’s chief operating officer. “We don’t rely on the bank. Our coin machines supply our internal needs.”
Beth Goldberg, a spokeswoman for Safeway’s eastern division, said the stores are facing limits on the amount of coins allocated from banks. But the limits have not reached a level where stores have needed to ask customers for exact change or place limits on paying in cash, she said.
Howard Bank, which has 15 branches in the Baltimore area, has begun checking in with business customers about coin needs, McKone said. The bank has been able to fulfill customers’ requests, though we “have to be more aware of inventory and use,” he said.
“Coin was never in short supply,” in the past, he said. " There was always an abundance, but now we have to be more mindful of what we have been able to get.”
The Federal Reserve, which manages coin inventory and distributes it to commercial banks, community banks, credit unions and thrifts, announced limits June 15.
“To ensure a fair and equitable distribution of existing coin inventory to all depository institutions... the Federal Reserve Banks and their coin distribution locations began to allocate available supplies of pennies, nickels, dimes, and quarters to depository institutions as a temporary measure,” the Federal Reserve said the announcement.
The Fed said it based its allocations on historic order volumes and current U.S Mint production levels and said it planned to continue to review and potentially revise limits. It has encouraged banks “to order only the coin they need to meet near-term customer demand.”
Trade groups representing industries that rely on cash transactions are urging the Federal Reserve, U.S. Mint and Treasury to push to return the supply chain to normal as quickly as possible. Business advocates said the rationing plan came as a shock. They fear the system for distributing coins is at the breaking point.
“There are millions of Americans who are underbanked that pay in cash/coins,” said Melissa Murdock, a spokeswoman for the Retail Industry Leaders Association. “It’s simply not an option for retailers to go cashless.”
In a letter to the chairman of the Federal Reserve and secretary of the U.S. Treasury, the retail group and others said their industries process large volumes of consumer transactions every day, and “many of those transactions are paid in cash. A critical, but largely unseen, part of these businesses’ operations, then, is obtaining sufficient amounts of coins to be able to handle cash transactions and provide customers with change.”
Besides the retail leaders association, groups that signed on to the June 23 letter include the Food Marketing Institute, National Association of Convenience Stores, National Automatic Merchandising Association, National Grocers Association and Society of Independent Gasoline Marketers of America.
“Some of our member businesses are being told that they cannot get coins from their banks at all,” the letter says. “This threatens the functioning of our member businesses and, by extension, the needs of their customers.”
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Once the economy opens more broadly and normal coin circulation patterns resume, inventory levels should return to normal, Fed officials said.
“What we’re seeing now is demand has started to come back,” McKone said. “Different states have opened up and people are back out in the economy.”
Businesses “have customers coming out and buying things they hadn’t previously, so the demand is starting to increase, but the supply hasn’t caught up yet,” he said.
The banker remains hopeful that the shortage, like others consumers saw early on in the pandemic, will be short lived.
Howard Bank is working to identify those customers who are most dependent on coins to run their businesses, such as retailers, laundromats and convenience stores, and assess their needs.
“We want to make sure customers are comfortable,” he said, “so that while there is a shortage, it’s not something that’s going to become an issue.”