Have you ever wondered where coins are made and why they sometimes begin to have massive shortages that last months? Well, let me inform you!

Recently, the US has lifted a coin shortage from where coins are distributed, such as banks and stores. Coin shortages in the past have not been a very common occurrence as the demand for money has always been present, but with the new generation of technology and recent national emergencies, coin shortages have been on a sharp increase in commonality. The main reason why this latest shortage occurred was due to the COVID-19 pandemic and the US mint had significantly decreased the production of US coins in each of the three mints in the United States.

The Mint decided to reduce coin production to prevent employee and civilian exposure to COVID-19. However the mint stopped the production of coins, they are not the sole reason why there were massive shortages. The mint only represents 17% percent of the entire circulation of US coins in the US. Obviously, the other 83% of the circulation of coins are the people who actually use the coins as money. The fact that during the pandemic, people began to start using digital currency as an alternative to physical money.

Here is what Federal Reserve Chairman Jerome Powell had to say to tell the House Financial Services Committee in June 2020, “With the partial closure of the economy, the flow of funds through the economy has stopped.” This statistic has also been vastly decreasing in popularity as the digital age has been very quickly taking over society. According to the federal reserve “Bills and coins were used in just 19 percent of all payments in October 2020.”

Data from Bankrate.com states that “Cash usage declined seven percentage points from the last pre-pandemic study in October 2019—a precipitous fall in just one year, considering Americans’ payment habits usually evolve slowly. Debit cards (28 percent) narrowly edged credit cards (27 percent) for the top spot.” If many were given a chance to make an educated prediction, the usage of physical currency will continue to be on a steady decline until ultimately it will become irrelevant.

Returning back to the original subject, all these data points show that coin shortages will be more common and should be expected that they should be increasing in severity. As the rise of digital currencies such as debit/credit cards, apps, and online banking continue to become more popular, the need for physical currencies will continue to diminish. As these mediums gain popularity, there have been many people calling for the invalidation of the US penny which adds to the public’s ongoing interest in invalidating physical currency as a whole. Albeit a pandemic to the rise of technology, coin shortages are always going to be destined to happen for the indefinite future.