HOW THE MINT DECIDES HOW MANY COINS TO MAKE

Listener and reader Jeff Bailey from Jonesboro, Arkansas, asked:

I've noticed that the mint numbers for coins can vary a lot from year to year. How does the United States Mint determine how many coins of each denomination to produce in a year?

In 2021, nearly 15 billion pennies, quarters, nickels, dimes and half dollars departed the U.S. Mint's facilities to be spent by the public.

Like Bailey pointed out, it's a figure that can fluctuate annually. In 2019, roughly 12 billion of these coins were produced.

To determine how many coins the mint should produce, the Federal Reserve devises a 12-month rolling forecast, according to the U.S. Mint's website. The Federal Reserve also gives the mint monthly coin orders.

The U.S. Mint uses this forecast to determine how much of each denomination it'll produce, then it makes the coins and transports them to the Federal Reserve banks and private-sector coin terminals.

The Fed banks then deliver the coins to depository institutions, which exchanges them with their customers. And that is how the circulation cycle begins.

 

Behavioral patterns, long-term demand, holidays, unforeseen events like natural disasters and a pandemic can all play a role in how many coins are manufactured.

Daniel Soques, an assistant professor of economics at the University of North Carolina Wilmington, said natural disasters increase the demand for cash and coins because disasters often disrupt electronic payment systems.

Soques noted that before 2009, each of the 12 Federal Reserve banks determined the need for coins on an independent basis and submitted those orders to the U.S. Mint.

This process was relatively inefficient, so the process is now centralized at the Fed's Cash Product Office, he said.

Assessing how many coins to produce is a lot different than figuring out the production of, say, crockpots, Soques explained.

They present a special problem because you have the other side of it, where they get reused, he said.

The Fed's Cash Product Office assesses the inventory at the Fed's roughly 200 coin vaults throughout the U.S. on a daily basis, he added.

The Fed wants a minimum inventory level of two weeks' worth of coins at each coin vault. So the CPO will move coins from one coin vault to another to make sure this happens, Soques said. If there aren't enough coins across all the coin vaults to meet demand, then the CPO will put an order for new coins into the mint.

Todd Martin, deputy chief of corporate communications at the U.S. Mint, said in an email that coins aren't circulating through the economy as quickly as we need them to, which means that sometimes coins are not readily available where they are needed.

To read the complete article, see:
How does the U.S. Mint decide how many coins to produce each year? (https://www.marketplace.org/2022/01/27/how-does-the-u-s-mint-decide-how-many-coins-to-produce-each-year/)

 

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