WILMINGTON, N.C. (WECT) - A nationwide coin shortage has businesses posting signs requesting “exact change only” or limiting transactions to credit and debit cards.
Home Depot and Circle K gas stations have signs posted in storefronts nationwide.
At UNCW, Asst. Professor Daniel Soques holds a PhD in economics.
“I don’t want people to freak out,” he said. “The Federal Reserve is pretty transparent. They’re a public organization that really wants people to be able to do transactions—that’s their role is to facilitate transactions for financial stability. They’re not freaking out about it. They do have a ration on it, but that’s really to tell banks to be careful about...if people want to hoard, try not to meet people’s hoarding demands.”
As the economy shut down amid COVID-19 precautions, the circulation of money essentially froze.
“It’s really a simple supply and demand issue of trying to get coins where they’re not being used to where they need to be used and usually that process is pretty easy when the economy is going normally but when you shut down the entire economy, coins end up just sitting stagnant,” Soques said.
Businesses regularly exchange cash for coins and smaller bills to be able to constantly keep up with breaking the larger bills and amounts people typically pay with. Particularly for businesses that do a large number of small transactions, the need for coins is great.
“Small businesses need change to be able to give to customers or else they’re going to have to round down and take that loss and in competitive businesses like gas stations, retail, every penny counts so you need cash and coin from banks in order to give customers correct change,” Soques said.
At Port City Java, we’re told roughly 85 percent of transactions are already done with a card. So while the coin shortage has been an inconvenience for cafe managers, the problem has been manageable thus far.
The U.S. Mint where our currency is made also slowed production as staff implemented social distancing protocols, limiting supply further. Production is expected to ramp up over the coming weeks.
Soques says the same issue is not being seen with small bills, only coins, and that it will work itself out so long as people and businesses do not panic and hoard coins and the economy continues to reopen and allow for the circulation of cash and coins.