The coronavirus pandemic has created another crisis for the U.S. economy: a coin shortage.
While testifying before lawmakers on Wednesday, Federal Reserve Chairman Jerome Powell said banks are facing a shortage of coins as a result of the pandemic and related lockdown, which triggered the worst economic downturn since the Great Depression.
"What’s happened is that with the partial closure of the economy, the flow of coins through the economy has gotten all, it's kind of stopped," Powell said. "At places where you go to give your coins and get credit at the store, get cash, folding money, those have not been working. Stores are closed. The whole system of flow has kind of come to a stop. We’re well aware of this."
As states begin to gradually reopen their economies, coins are starting to move around again, he said. Powell said the U.S. central bank is working with the U.S. Mint and the 12 district reserve banks to address the issue.
"We've been working on this problem," he said. "We feel like we're making progress."
The question about coinage was posed by Rep. John Rose, R-Tenn., who asked Powell whether he was aware the virus outbreak had triggered a coinage circulation problem. Rose said banks in Tennessee have been notified by the Fed that they would only receive just a fraction of their weekly order of coins and were concerned they would run out of coins by the end of the week.
“We all don’t want to wake up to headlines in the near future such as ‘Banks run out of money,’” Rose said.
The pandemic has "significantly disrupted the supply chain and normal circulation patterns" of pennies, nickels, dimes and quarters, the Federal Reserve district banks said recently.
Powell's comments on shortage came during his two-day testimony before Congress, during which he warned that a complete economic recovery hinges on the containment of COVID-19. He warned the House Financial Services Committee on Wednesday the economy will need support for an "extended period of time," and stressed that a full bounceback will take time.