One of the biggest mysteries of 2020 was the change shortage. Why were so many retailers requesting that patrons either use a card or have exact change? Many of us were puzzled by these signs that have become a common fixture of many checkout lines across the nation. What is the explanation for such a monetary phenomenon? Within my nearly thirty-two years on this planet, I have never been requested by a brick-and-mortar vendor to have exact change. However, in the era of COVID-19, there are many strange things are happening. Never mind the change shortage, a few months back the United States was grappling with a toilet paper shortage. One commodity nearly everyone has taken for granted.
As one could predict, the national coin shortage is related to the COVID-19 pandemic. This calamity of a coin shortage can be linked back to the precautions taken to limit the spread of the virus. The shelter-in-place orders resulted in the shutdown of many stores and restaurants. Resulting in an overall lull in economic activity. In other words, the cash registers of many retail outlets were not be replenished by circulating cash (include metal coins). Some may surmise that due to the uncertainty of pandemic many people may opt to hold cash balances. Coins generally are circulated throughout the economy through bank deposits and are recirculated back to banking customers through the change provided by retail stores and restaurants. Per the U.S. mint, 83 % of the coin supply is recirculated through stores and third-party coin processors.
The downturn in economic activity during the shutdown left only meager coin reserves in the cash registers of American stores. Meaning that once stores reopened, they would quickly exhaust their coin supplies. This was only compounded by the fact that the banks could not fulfill the retail demand for coins due to fewer customers depositing them. The mint falling behind on coin production left retailers had no other option but to request that customers either pay by a card or exact change.