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Free drinks, store credit and cries for help: How we're handling the coin shortage

Samantha Masunaga, Los Angeles Times on

Published in Business News

A laundromat operator imploring friends and relatives to trade their stashes of quarters for his dollar bills. A restaurant offering customers free drinks instead of nickels and dimes. Supermarkets issuing pennies' worth of store credit. A woman filling her purse with coins so she can pay in exact change.

The COVID-19 pandemic has caused a coin shortage, and it's hitting small-business owners, big retailers and everyday shoppers -- especially those who don't have credit or debit cards -- in ways big and small.

The main way coins circulate through the economy is via store transactions and coin recyclers, according to the U.S. Mint. But as the coronavirus spread, stores closed and visits to essential retailers plunged.

That means coins are stuck inside people's homes.

Coinstar felt the trend begin. The Bellevue, Wash., coin-cashing company operates more than 17,000 kiosks throughout the U.S., the vast majority of which are in grocery stores.

In April, transactions at Coinstar kiosks decreased "more than a few percent" compared with their normal volumes, Chief Executive Jim Gaherity said in an interview this month. Over time, the transaction rates started to slowly climb back, though the demand for coins "is still far and away beyond what the supply is out there," he said.

 

When stores need coins, they turn to banks. If the request is more than what the bank has on hand, it can relay that order up the supply chain to the Federal Reserve, the U.S. Treasury and, finally, the U.S. Mint. But when one part of the chain is disrupted, it slows the entire process.

"You had a breakdown in the system because of the closing of the stores and banks," said Douglas Mudd, curator and museum director of the American Numismatic Assn.'s Edward C. Rochette Money Museum in Colorado Springs, Colo. "And when it started up again, there was a bit of an overdemand."

One part of the solution: making more coins. The Mint said it has been operating at full production capacity since mid-June and is on track to mint 1.65 billion coins a month for the rest of the year. Last year, the Mint produced about 1 billion coins a month.

But newly minted coins made up only about 17% of the coins in circulation last year, according to the Mint. The rest comes into the supply chain from third-party coin processors and stores.

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