Strategic Allocation of Coin Inventories
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.
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. Depository institutions also can help replenish inventories by removing barriers to consumer deposits of loose and rolled coins. Although we are confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns, we recognize that these measures alone will not be enough to resolve near-term issues.
Consequently, 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.
How Coin Allocation Works
temporary coin allocation methodology is based on two factors: 1) historical 2019 average order volume by coin denomination and depository institution endpoint; and 2) current U.S. Mint production levels. Order limits are unique by coin denomination. The order amounts have been reduced to about 40 percent of historical monthly orders for nickels and dimes and 60 percent for pennies and quarters. The order limits are the same across all Federal Reserve coin distribution locations, but limits will be reviewed and potentially revised based on national receipt levels, inventories, and Mint production. If your institution did not order any coin, or did not order a particular denomination, in 2019 and 2020, and you wish to order coin after the coin allocation has been implemented, your servicing Reserve Bank will help determine the order allocation on a case-by-case basis.
Service and Support
We appreciate your support as we respond to these challenges together.