Considers Coin Starting Reserve
By David C. Harper
Coins are in
surplus now but the Mint is thinking about a
reserve of coins to provide a buffer supply in
times of high demand, or unexpected disruption,
Mint Director Edmund C. Moy said in an interview
with Coin Chat Radio May 20.
Right now the Mint produces coins month to month
to match orders from the Federal Reserve System,
which oversees the banking system's supply of
coins and paper currency. It has no extra supply
in on hand.
"It would be nice to have a bank of coins to
draw on," he said.
During some recent months the orders for coins
exceeded the Mint's capacity to produce them,
Moy pointed out. A reserve of coins would allow
the Mint to meet comfortably this higher demand.
"We've decided that the strategic reserve was a
good idea to explore," Moy explained.
"If this costs a lot of money and it's cheaper
for us to find other ways to meet the demand,
that's where we're going to go."
Why examine this possibility in a year when coin
demand and production is expected to drop by 70
percent from the 10 billion coin level of 2008?
Moy said it is a question that first came up two
years ago when the Mint's distribution center
was hit by a tornado.
With Washington intervening with the automobile
manufacturers in Detroit, is a coin reserve some
way to keep blank and strip suppliers to the
Mint in business?
Moy said at this point suppliers have not
officially been part of the discussion, but he
noted that if one of them is acquired by another
firm or goes out of business, it could create
difficulties for the Mint.
How big a stock of coins would be needed?
Moy said that is something that is under
consideration and a specific target is not yet
"We were created to create coins for use in
commerce. The worst thing that can happen is
that we have a shortage of coins," Moy said.
"It's better to have a little bit extra."
To that end, "We're studying all the past
trends," he said.
Because coin demand began falling even before
the current recession, has there been a paradigm
shift such that future demand for coins would be
lower than what used to be the case?
Moy noted that coin demand at the commercial
level has been holding up and coins are used in
about one-third of commercial transactions. It
is the demand for checks that has been
"Checking has gone down by roughly half its
volume," Moy said.
He expected fundamental underlying demand for
coins to continue to hold up.
The Mint is also evaluating the impact on Mint
production of what Moy called coin aggregators,
a term for Coinstar, which is a business that
puts coin counters in commercial establishments
and allows consumers to exchange coins for store
credits or paper money.
This has the effect of meeting commercial demand
for coins without additional new supplies being
needed from the Mint.
"We hope to make some decision about this this
year," Moy said.
Should the Mint decide to proceed with the
concept of a strategic reserve, he said that
nickels and dimes would be good denominations to
strike for inclusion in it because so few of
them have been struck this year and because
their designs are not changing regularly as is
the case for quarters and dollars.
This might be a warning to collectors who are
drooling over the current relatively low
mintages so far this year and the prospect that
no more nickels and dimes will be produced.