The New York Federal Reserve’s Cash and Custody Division confirmed a drop in the nationwide availability of coins — quarters, dimes, nickels and pennies — as a result of the COVID-19 pandemic, which is also affecting the Puerto Rico market, the Bankers Association stated.
The decrease is mainly due to the interruption of the circulation of currency and the reduction in the production of coins by the U.S. Mint due to the protective measures put in place for its employees during the pandemic.
In turn, currency orders from banks to the Federal Reserve have been on the rise as the economy reopens, all of which has resulted in a temporary reduction of the Fed’s inventory.
The shortage of coins reflects locally as Puerto Rico’s banking industry relies heavily on the inventory and supply from the New York Federal Reserve, the Bankers Association said.
“It’s important to note that this is a temporary national situation that is beyond the control of banks and businesses in Puerto Rico,” said Zoimé Álvarez Rubio, executive vice president of the Bankers Association.
“We’re aware that there’s a high circulation of currencies on the island. Commercial banks are working on strategies to mitigate this situation,” she said.
The shortage is expected to last several weeks, due to a measure the Fed implemented to assign proportional limits on the distribution of coins to banks, to ensure an equitable distribution of the inventory of existing coins. This measure does not apply to the different denominations of the dollar, the entity said.
As a result of this situation, the Bankers Association is urging citizens to use electronic methods of payment as much as possible. The entity also recommends that if a person plans to pay in cash, they should try to use exact change or coins to help restart their flow through businesses.
“We want to stress that this isn’t a situation caused by businesses, and that banks are evaluating all the alternatives to support and satisfy the needs of their commercial customers, for the duration of the situation,” Álvarez said.
“We will continue to closely monitor this situation and keep in constant communication with the New York Federal Reserve regarding its development,” she added.
The Fed is reportedly working on several fronts to mitigate the effects of low currency inventories. This includes managing the allocation of existing inventories, working with the U.S. Mint to minimize currency supply constraints, maximize coin production capacity, and call on banks to order only the coins they need to supply short-term customer demand.