Physical Currency

I got a rather amusing email from one of my banks today, encouraging the use of coinage. A large part of that amusement comes from the fact that I actively avoid physical currency in practically all forms. I’m not in the habit of having or using it, so the idea that I might be preventing it from circulating borders on the absurd.

I realize this isn’t a universal stance. In my region it’s a fairly rare one, as far as I know. More interestingly, even though I may not have a giant secret coin stash, the fact remains that coinage is a bit short at the moment and the bank has decided that individuals are to blame. They’re just echoing the same talking points as the Mint.

According to the Federal Reserve it isn’t a shortage of actual coins, but rather one of circulation. Since one of their solutions is to place caps on distribution quantities in order to “ensure fair distribution,” I can see where individual banks might feel pressured to incentivise turn-ins and deposits to alleviate their own personal shortages once they’ve hit the cap.

The stated reason for this is primarily that COVID has altered and disrupted normal circulation patterns. I’m not sure I’m willing to buy that explanation at this point though. I’m sure it played a part, but we haven’t had the widespread lockdowns that many other countries have had. Certainly not in my part of the country. To what end would people collectively be holding on to change more than normal?

I could throw a few things at the wall, but it’s pure conjecture with nothing to back it up. Perhaps the stimuluses combined with upward wage pressure and a volatile labor market have put people in a position where they aren’t having to cash out their “coin jars” to pay for expenses. Perhaps some are stockpiling it out of some expectation of social upheaval. Perhaps there’s several construction companies going around and epoxying it to floors and other surfaces as a decorate finish. Beats me.

It’s just an amusement and curiosity at the moment though, at least within my own life. I’m not impacted in any way by it and I have no meaningful way to assist with the problem.

Y’all take care. Remember, the bank really wants your coins, but not enough to pay more than face value.

One thought on “Physical Currency

  1. I have no idea how it is in the US but I can say for certain that in the UK, in the bookstore where I work, the huge majority of customers neither use nor carry coins. For example, we charge 10 pence for a bag and almost all of those sales people do on their phones or on a bank card rather than look for a coin. If people do look for coins, frequently among three or four in a group only one will have any coins on them and even then almost always only the larger coins (£1 coins, mostly).

    I do still carry loose change but nothing smaller than a 50p piece and I will use coin to pay for things occasionally. Mrs Bhagpuss hasn’t willingly used a coin in years. We put all of our smaller coins in a bag in the hope we might one day do something with them but it got almost too heavy to lift and I stuffed it out of sight in a cupboard somewhere. About the only thing I really used coins for in the last few years is at the laundromat but the guy who runs it recently had all the machines converted to use contactless payment (in addition to coins) so the chances are I won’t even take coins for that any more.

    As for the redemption rate from the banks being only 1:1 – that’s very good. About the only way I could convert my coins in bulk to paper money or bank credit would be via one of the machines you sometimes see (our supermarket has one) where you feed the coins in and get a payment back. Currently I believe you get 70% of face value. Technically you can always take them to your bank but as I said, mine weigh more than I can comfortably carry and I can tell you from experience that banks may have to change them but they realy don’t like doing it.

    The only thing that really surprises me about the email you got is that a general shortage of coin is considered to be a problem by anyone. I was under the strong impression that almost all parties involved, from user to supplier, would be more than happy to see coins (and indeed all cash) disappear for good. Only very old people and criminals really appreciate cash.

    Liked by 1 person

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