The Federal Reserve Bank and the U.S. Mint have engaged a third-party consultant to conduct a thorough analysis on the current state of the coin supply chain and provide recommendations for improving the circulation of coin throughout the supply chain within the United States to foster a more resilient supply chain and improve overall coin circulation for all participants to have sufficient supply and access to coin needed.
Leaders from the Federal Reserve and U.S. Mint will co-present insights from this supply chain review, share a root-cause analysis of the massive circulation disruption, and provide an understanding of how COVID-19 accelerated secular trends with currency and coin across the supply chain.
During the COVID-19 pandemic, we have observed significant disruptions in the supply chain and normal circulation patterns for U.S. coin. Financial institution coin deposits to the Federal Reserve Bank (FRB) dropped to 40 to 50 percent below 2019 volume at the start of the pandemic and have not yet recovered to pre-pandemic levels. Coin orders received by the FRB also dropped at the start of the pandemic but returned to pre-pandemic levels starting around March of 2020 due to increased demand in anticipation of reopening after the initial lockdown. Under pre-pandemic circumstances, the FRB held approximately 6 months of inventory at any given time. The increased order volume and lack of deposits to the FRB created a gap of as much as 3.5 billion coins per month between coin demand and available supply, quickly depleting FRB and U.S. Mint contingency coin inventory and causing the FRB to implement coin order limits to equitably allocate available coin.
Economic and behavioral changes resulting from the COVID-19 pandemic as well as shifting business and consumer payment preferences and decisions, suggests most of these coins are sitting dormant inside America’s 128 million households. As people have changed their spending habits, and coin-intensive businesses and financial institution branch locations have been less accessible, it is believed a significant amount of the nation’s coin is likely pooling in change jars, in car cup holders and in shuttered businesses, making it difficult for the businesses of this country to get the coin that they need to support cash transactions.