Since mid-2020, many retailers and other businesses that handle cash have posted signs asking customers to pay with exact change due to a coin shortage in the United States. But is there a coin shortage?
In June 2020, the Federal Reserve announced that the COVID-19 pandemic had disrupted the supply chain and “normal circulation patterns for U.S. coin.” They cited decreased coin deposits (which usually come from banks, retail stores and other businesses that accept cash) as the main cause behind this disruption, along with decreased coin production at the U.S. Mint due to new measures to protect its employees.
Is There a Coin Shortage?
Experts have described the current situation as a coin circulation disruption, rather than a true coin shortage. “Once circulation is resumed, these disruptions will ease out,” said Yiming Ma, an assistant professor in the finance department at the Columbia Business School.
Because of stay-at-home orders and other mandates to slow the spread of COVID-19, many people stayed at home and turned to online shopping. Businesses that primarily accept coins, like laundromats and vending machines, likely had to stop operations during the pandemic due to social distancing. Both businesses and consumers found themselves wondering, “Is there a coin shortage? What does that mean?”
Combined with already-reduced operations at the U.S. Mint, the decrease in cash transactions drastically slowed down the flow of coins in the economy. Fewer coins in circulation then reduced the number of ash deposits from businesses and rippled through the cash cycle, leading to a nationwide disruption in the coin supply chain.
While there actually were enough coins in the economy, they simply weren’t moving from consumers to businesses to banks fast enough. In fact, 83 percent of the nation’s coin supply comes from the recirculation of coins through businesses and coin processors, like cash-in-transit companies.
To replenish their coin reserves, businesses have offered incentives from free food to free piggy banks to encourage consumers to bring in their coins. And as the supply of available coins has become lower, banks have had to ration out coin deliveries to businesses to ensure an equal supply for everyone.
Businesses should not worry about this decreased coin circulation: As the economy slowly reopens, consumers will return to brick-and-mortar stores and spending the cash and coin they’ve held onto for the past few months. Since mid-June 2020, the U.S. Mint has been operating at full production capacity, producing over 1 billion coins each month even during the COVID-19 pandemic, to ensure coins remain available to banks, financial institutions and retailers.
Why Coin Bags are Critical Banking Supplies
The Fed has advised banks, CIT messengers and other cash processing businesses to order only what they absolutely need to replenish their coin stores. This had led many banks and financial institutions to wonder if they should continue to purchase bank coin bags.
High-quality bank coin bags are essential banking supplies, regardless of the state of coin circulation. Because banks, credit unions and CIT companies are all trusted sources to acquire cash and coin, cash security needs to be a high priority for these businesses.
Reliable Cash Management
Cash security goes beyond just preventing cash from being stolen: Financial institutions must also have accurate records of their cash stores to ensure they have a complete view of their cash flow.
Many bank coin bags are printed with high-visibility barcodes for easy processing and large serial numbers to facilitate asset tracking via CCTV cameras. These features make it easier for banks and CIT companies to keep track of coin bags without manually checking each pallet for a specific bag.
Single-use bank coin bags are one of the most cost-effective banking supplies for securing cash. Coin bags are designed to carry the weight of hundreds of coins without the bag bursting. These bags are manufactured with high-quality resins to withstand the harsh environment of cash vaults and armored couriers.
The adhesive seals on bank coin bags are made to withstand the vigor of the cash transit process to ensure bags remain closed and secured even if they shift in an armored car. Plastic coin bags are also made with special resins with lots of friction to prevent bags from slipping as they are stacked on pallets.
Tamper Evident Features
Many bank coin bags are also made with tamper-evident security features to indicate if someone has tried to open the bag, which can make a big difference if a CIT company notices a discrepancy between the expected amount and the received coin deposit. By detecting tampering attempts as early as possible, banks and CIT companies can start their investigations at a specific part of the cash supply chain.
Banks are a primary source of coins for both consumer and commercial banking clients. With the economy slowly reopening and near-daily updates about the coronavirus, banks must be prepared to offer coin-related services to their clients. If banks and financial institutions are not ready to process coin orders and deposits, they could risk compromising their reputation among consumers and businesses alike.
In 2020, many banks launched coin buyback programs to incentivize consumers to trade in their coins for cash and bring existing coins back into circulation. In fact, because most banks are already well equipped to process coin deposits from consumers (even people that don’t bank with them), most people will turn to banks to exchange rolled coins for cash.
Invest in High-Quality Bank Coin Bags from CONTROLTEK
As banks and financial institutions continue to process coins, they should invest in durable coin bags to transport their coin deposits. CoinLOK from CONTROLTEK is the world’s first (and strongest!) single-use bank coin bag. Used every day by major armored couriers and banks, CoinLOK fits all major coin counters and sorters to improve the efficiency and security of your coin processing.
CoinLOK has exceptionally strong construction to virtually eliminate breakage. Contact us today to learn more about how CoinLOK can optimize your banking operations.