Local Banks Dealing with Disruption in Coin Circulation

by SC Publisher Shannen Hayes

Geoff Roepstorff

The Federal Reserve has seen a significant decline of coins in circulation because people are not spending them as regularly at businesses, many of which remain temporarily closed or people are not visiting them as often as they were before the pandemic.

“Businesses with high coin volume in their banking deposits – think fast food chains, laundromats, car washes – help circulate coins back into the banking system,” said Bank of the Islands/Edison National Bank CEO Geoff Roepstorff.

The system – in which businesses collect coins and deposit them at banks, which send the money to the Federal Reserve, which then redistributes the change – was severely disrupted on both ends as business closed down and customers stopped going to their banks.

The Federal Reserve warned in June that coin deposits financial institutions make at the central bank had declined significantly, making it tougher to fulfill orders for coins where supply is needed. “The typical places where coin enters our society have slowed or even stopped the normal circulation of coin,” the Fed said last month.

“It may be better to think of the current unmet demand for coins as a circulation disruption, rather than a currency shortage,” said Roepstorff. “Added to that, the U.S. Mint reduced its new coin production as it changed minting procedures to keep its employees safe.”

The Federal Reserve has encouraged banks to order only the coins they need and to make depositing coins easy for customers. Sanibel Captiva Community Bank put out a call last week for its customers to turn in their coin for cash dollars or direct deposit and coins do not need to be rolled.

While some banks have complicated coin deposits by removing bulky coin-counting machines from their branches in recent years as the industry has relied more on digital services, Sanibel Captiva Community Bank still has them at their branches on Sanibel and in Fort Myers.

Bank of the Islands/Edison National Bank anticipated the disruption and planned accordingly to fulfill its customers’ coinage needs at its four branches, said Roepstorff. “We are aware that other banks in Florida and nationwide have been experiencing a coin shortage, but that is not the case for us.”

Coins are still plentiful. In April, The U.S. Treasury estimated about $48 billion in coins were in the market, up by more than a billion dollars compared to last year.

But sales at restaurants, bars and gas stations nationwide dropped more than 40 percent in April compared with a year ago. For shops and other small businesses that rely on physical money and coins to give out as change, the disruption has become another weight as they try to stay afloat through the pandemic.

“Our advice would be to recognize this as a short-term disruption, avoid any impulse to hoard coins, and use debit and credit cards where practical to help businesses that are currently feeling the coin circulation disruption,” said Roepstorff.

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