Americans Want Change. Private Mints Are the Solution.

Congress should stop preventing the private sector from making its own coins.

Two years after a lack of spending brought on by the COVID-19 pandemic caused a coin shortage, American retailers still find themselves short on change.

In March, industry representatives called on Treasury Secretary Janet Yellen for help as the shortage lingers, but they're unlikely to find relief. The federal government has been steadfast in its commitment to present only short-term solutions, like rationing coins or pushing social media campaigns. If the government actually wanted to solve the problem, it would allow the private sector to produce its own coins.  

In 2020, the combination of government-mandated lockdowns, consumer health concerns, and a shutdown of the U.S. Mint brought the circulation of coins to all but a grinding halt. Though the economy at large is much better than it was in summer 2020, the circulation of coins has struggled to recover.

While some businesses have chosen to break away from cash transactions altogether in response to the shortage, others don't have that luxury. Brian Wallace, chief executive of the Coin Laundry Association said, "[If] we can't make change, we can't make money." That reality became clear when some business owners began driving for hours to find available coins.

Consumers have been hit hard too. For the 7.1 million unbanked and 24.2 million underbanked households in America, cash is one of the most important resources they have for making purchases. The coin shortage has locked many of them out of the economy or caused them to incur new costs on top of current inflation.  

The Federal Reserve's main response has been to ration coins "based on historical order volume by coin denomination and depository institution endpoint, and current U.S. Mint production levels." The U.S. Mint, through advertisements and social media campaigns, also asked the public to "pay with exact change and return any spare change to circulation by depositing coins, exchanging them for bills at a financial institution or taking them to a coin redemption kiosk." And a "U.S. Coin Task Force" was convened to monitor the ongoing shortage. At best, these are merely short term solutions. 

The task force's latest report notes that its members "have worked tirelessly to address the coin circulation disruption, issue recommendations for the broader coin supply, and influence actions within their organizations." And while they argue their report "reflects the commitment, enthusiasm, and creativity" the members used in crafting their suggestions, there was a notable solution missing from the task force's recommendations: welcoming private currency.

It wouldn't be the first time the private sector stepped up to provide alternative forms of currency when supplies of official money have run out. So why haven't private businesses done so during this shortage? There are many possible reasons why a "Pat Penny" or a "Dex Dime" hasn't taken off, but it's most likely because the U.S. government doesn't like to see currencies competing with its monopoly on money—even if the government itself is failing to meet the needs of Americans.

The government has made it illegal to make metal coins that are intended to be used as money. This prohibition is different from counterfeiting—the law specifically bars the creation of coins "of original design." The Department of Justice and U.S. Mint used this section of the law most infamously in 2006 against the National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED). It declared the use of the NORFED Liberty Dollar as money to be a federal crime. After such a prosecution, it should be no surprise that the private sector has been hesitant to provide an alternative currency like it has in the past.

Congress should strike down that restrictive language and welcome coins of original design. Instead of chasing shortages with short-term solutions, welcoming the private sector to supply its own coins—as history has shown it will—could be just what's needed to help solve the current coin shortage and stop future shortages from taking hold of the economy.