In light of the recent coin shortage in the United States, Reader’s Digest has posed the questions: why do we need coins, and what would happen if the US stopped minting them?
According to Todd Martin, chief spokesperson for the United States Mint, for almost 250 years the mint has been the sole legal provider of legal tender coinage in the US. It has four production facilities (in Philadelphia, San Francisco, Denver and West Point) and is headquartered in Washington, DC. Of course, its famous bullion depository is Fort Knox in Kentucky.
Luckily for the 1,650+ people working at the mint, there are legal protections in place to prevent it being shut down. The Federal Reserve monitors demand in order to regulate currency supply, and places regular orders for coins. Still, there are those who question why coinage is needed at all.
Pennies—the smallest denomination coin—are singled out as an example of the potential benefits of removing coins from circulation. Due to inflation, it costs more to make a penny than it’s worth, so there may be savings to the government if they were retired. Critics say this could lead to prices being rounded up (from 99 cents to a dollar), while others argue consumers would probably break even in the long run.
The most significant argument against withdrawing coins is that it would likely hurt retailers and other businesses that conduct transactions solely in cash, as well as ‘the unbanked’: people who do not have a bank account, nor access to credit or debit cards.
There is also the sentimental value people attach to their coinage as a representation of their country, its history and culture, and Americans are no exception. In a 2014 survey, 71 percent of people said they stop to pick up pennies from the sidewalk, and 43 percent of respondents said they would be ‘angry’ or ‘disappointed’ if the government were to stop minting pennies.
So, what can Americans do to ease the current coin shortage? The United States Coin Taskforce—established in July to help address the problem—asks people to pay for items using exact change, deposit coins with financial institutions, and exchange loose coins for notes at coin recycling kiosks.