I’m seeing places that say they’re short on coins, how does this happen? I looked it up and I’m still confused.
In: Economics
Another contributing factor during COVID, but not necessarily a major one, was all the business that suddenly closed and didn’t re-open for months, if at all. Many of them had cash drawers at the ready, including lots of coinage. But all that cash was effectively “lost” when the doors were closed and no one entered. Same with all the vending machines and other coin-operated devices that were suddenly not being used and not being emptied of their monies. That’s part of why there was a coin shortage at the beginning of the lockdowns.
As restrictions relaxed and businessess re-opened, those coins they had locked away started becoming available again. But as others have posted, the increase in contactless payment methods and decrease in physical money usage in general has led to a decrease in coin circulation, and thus a shortage.
Another non-zero but minor factor would be numismatics; coin collecting. There have always been numismatists that have taken a fraction of the coin supply entirely out of circulation for collecting purposes. And like many hobbies during lockdowns, there was a potential increase in the numbers of people getting involved in the hobby. More collectors and collections means fewer coins in circulation; even moreso for those that kept up their collections after released restrictions. Again, probably not a truly significant amount, but still a factor.
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