Banks in the United States and Puerto Rico are experiencing a reduction in currency supplies.
This is because the Cash and Custody Division of the New York Federal Reserve reported on the decrease in currency inventories –From 25 ¢, 10 ¢, 5 ¢ to 1 ¢ – nationwide as a result of the covid-19 coronavirus pandemic.
This currency deficiency is reflected locally, since the banking industry in the Country depends on its Most of the inventory and supply of coins of the New York Federal Reserve, alerted the Association of Banks of Puerto Rico.
The situation will last for several weeks due to a measure implemented by the Reserve that assigns proportional limits in the distribution of coins to depository institutions, to ensure an equitable distribution of the inventory of existing coins. This measure does not apply to the different denominations of the dollar (banknotes).
Why did it happen?
The decrease is mainly due to the interruption of the circulation of currency and the reduction in the production of coins by the U.S. Mint (authority issuing the currency of the United States) due to the protection measures put in place for its employees.
In turn, the orders of coins by the depository institutions to the Federal Reserve have been increasing after commercial reopens, all of which results in the inventory of Reserve currencies being temporarily reduced.
“It is important to clarify that this is a temporary national situation that is beyond the control of local banks and banks. businesses in Puerto Rico. We are aware that there is a high circulation of currencies on the Island. Commercial banks are working on strategies to mitigate this situation ”the executive vice president of the Association of Banks expressed in written statements to the press, Zoimé Álvarez Rubio.
The entity and its member banks urge citizens to make use of electronic means of payment to the extent possible. Also, it recommends that, if they are going to make a payment in cash, they try to do it with exact change or with coins to help recirculation through businesses.
“We emphasize that this is not a provoked situation by businesses, and that banks are evaluating all the alternatives to support and satisfy the needs of their commercial customers, for the duration of the situation. We will continue to closely monitor this situation, and maintain constant communication with the New York Federal Reserve about its evolution, " added Álvarez.
The Federal Reserve is working on several fronts to mitigate the effects of the lows coin inventories. This includes managing the allocation of existing Fed inventories, working with the U.S. Mint to minimize currency supply constraints, maximize currency production capacity, and call on depository institutions to order only the coins they need to supply short-term customer demand.
The Federal Reserve is working on jointly with the Reserve Banks and the US Mint and a currency recirculation is already beginning to be seen, as the economy continues to reopen.