When you go to a retail store in the US, Europe and several other areas you will find that there is a shortage of cash coins. But what is happening in the background is a run on ATM banknotes. Many banknote printers are running at full capacity to meet the cash demand during COVID-19. What is going on?
Source: Boston Herald
Early in the COVID-19 pandemic there were concerns that banknotes and coins were vectors for virus transmission. Some printers and banks came up with techniques to eliminate any virus that might exist on the notes. Later it was pretty well concluded that the virus does not survive on hard surfaces for very long.
Source: Pixabay
COVID-19 has also caused massive shutdowns of businesses, manufacturing operations and international trade. These shutdowns have affected raw material suppliers and that is affecting the production of coins. But the biggest issue is that there are jars of coins sitting in people’s cupboards, and in rolls at closed retail stores. Many stores are rewarding customers who use exact change when paying in cash or bring in extra coins. Government-run mints like the US Mint are running at significant reduced personnel, while the private sector is running at 80% + of normal. So these mints just can’t keep up.
Source: Banknote World
A similar issue is going on with banknotes. There just isn’t enough circulation going on. It is hard to see that this is the only reason. When there are crises occurring, people feel more comfortable with cash. During the Y2K scare in 2000, the demand for hard currency skyrocketed. Same after 9/11 and the same thing happened when SARS hit. This crisis has added another impact. Because of the concern about virus on used notes, banks have tightened their clean-note spec, so only very clean, very crisp notes are being put back into cash circulation.
Banknotes often take 3 months or more to go from production, through the cash cycle and end up in an ATM. Now, it can be as short as 2 weeks. Strange times.
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