Cash Services Notification: Federal Reserve Coin Shortage
Effective Monday, June 15, Reserve Banks and Federal Reserve coin distribution locations will begin allocating coin inventories. Several Reserve Banks have already been unable to supply all coin ordered by depository institutions in some locations. To ensure a fair and equitable distribution of existing coin inventory to our customers, effective June 15, the Federal Reserve Banks and their coin distribution locations will allocate available supplies of pennies, nickels, dimes, and quarters to FedCash® Services customers which includes UMB Bank. As a result, we are temporarily unable to fulfill new coin orders. Below is further detail on the announcement from the Fed.
- When did this change take place?
- UMB has been notified that effective June 15, the Federal Reserve Banks are allocating orders industry wide of coin to ensure a fair distribution of our lower than normal coin inventories among depository institutions.
- Why is this happening?
- Due to the current environment, circulation of coin has been significantly impacted as consumers have not been taking in coin to Banks, Coin Recyclers at grocery stores, etc
- How long will these restrictions be in place?
- It is unknown how long the Federal Reserve will keep these restrictions in place. UMB is in close contact with the Fed regarding the status of this situation and will update you as information is provided
Summarized Fed Announcement:
The COVID-19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin. In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly and the U.S. Mint’s production of coin also decreased due to measures put in place to protect its employees. Coin order levels have begun to increase as regions reopen, resulting in Federal Reserve’s coin inventory being reduced to below normal levels. While the U.S. Mint is the issuing authority for coin, the Federal Reserve manages coin inventory and its distribution to depository institutions (including commercial banks, community banks, credit unions and thrifts) through Reserve Bank cash operations and offsite locations across the country operated by our vendors.
The Federal Reserve is working on several fronts to mitigate the effects of low coin inventories. This includes managing the allocation of existing Fed inventories, working with the Mint, as issuing authority, to minimize supply constraints and maximize coin production capacity, and encouraging depository institutions to order only the coin they need to meet near-term customer demand.
Although the Fed 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, they recognize that these measures alone will not be enough to resolve near-term issues.