(CNN) — Masks were the first to go. Then toilet paper flew off shelves. And while Americans are being nickel-and-dimed with coronavirus-related costs in a shaky economy, the latest national shortage includes, well, nickels and dimes.
There’s a coin shortage in the US.
“What’s happened is that, with the partial closure of the economy, the flow of coins through the economy has gotten all — it’s kind of stopped,” Federal Reserve chairman Jerome Powell said during a virtual hearing with the House Financial Services Committee on Wednesday.
That’s because the supply chain that coins usually flow through has been interrupted during the pandemic, Powell said.
Banks and businesses have shuttered or changed the way they operate. And so there are fewer coins reaching the public.
“The places where you go to give your coins, and get credit at the store and get cash — you know, folding money — those have not been working. Stores have been closed,” he said. “So the whole system has kind of, had come to a stop.”
During the hearing Wednesday, Rep. John Rose of Tennessee told Powell that banks in his district were notified by the Federal Reserve that they’d only receive a small portion of their weekly coin order. The banks told him they’d likely run out of coins by the end of the week or may need to round up or down if they run low, Rose said.
“In a time when pennies are the difference between profitability and loss, it seems like it might be a bigger concern than the announcement from the Fed would indicate that it is,” Rose said.
What’s being done
To mitigate the coin shortage, the Federal Reserve Banks began the “strategic allocation of coin inventories” this week to evenly distribute coins across banks and credit unions. Those “strategic allocation” measures include imposing order limits based on the historic order volume of those coins and how many coins the US Mint is currently producing.
In the meantime, the Federal Reserve is working with the Mint to produce more coins and lift supply constraints. The Reserve encourages institutions to order only the amount of coins they need to meet customer demand in the short term.
“Although the Federal Reserve is confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns, we recognize that these measures alone will not be enough to resolve near‐term issues,” the Reserve Banks statement said.
Federal Reserve officials believe the shortage is temporary, Powell said.
“As the economy reopens, we’re seeing coins begin to move around again,” he said.