COVID-19 sparked a U.S. coin shortage, but a U.K. surplus
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A strange thing happened during the coronavirus pandemic: Business and bank closures caused the supply of coins in America to dry up.
In the early days of the pandemic during lockdown, people weren’t out shopping so that meant they also weren’t spending their money in stores. Later, when the economy reopened, many businesses wouldn’t accept cash and instead encouraged customers to pay with a debit or credit card.
While economic pain from COVID-19 has been global and widespread, a coin shortage is not something every country is dealing with — including the U.K.
In fact, coins are in such low demand that the Royal Mint will, for the next decade, stop producing 2 pence and 2 pound coins.
So, what’s with the apparently huge difference in the way British and American shoppers spend money?
On the global edition of “Marketplace Morning Report,” Natalie Ceeney, chair of U.K. financial technology group Innovate Finance, explained the factors at play. Below is an edited version of her conversation with the BBC’s Victoria Craig.
Victoria Craig: Why did the U.K. not experience a coin shortage like the U.S. did?
Natalie Ceeney: One of the big trends over the last decade in the U.K. has been a massive switch away from cash toward digital payments. So if I go back 10 years, six out of every 10 payments were in cash. And that’s fallen pretty dramatically during lockdown. Quite simply, people aren’t using cash as much.
Craig: Here in the U.K., we have technology that lets us tap our cards to make a payment in a shop or on mass transit. We don’t have to insert our cards into a reader, enter a PIN and then go through that process. Has the ease of technology made the transition to digital payments quicker in the U.K. than in the U.S.?
Ceeney: Absolutely, yes. What we know with digital payments is when people get used to doing something, the barriers come down. And, hey, if you can tap a card to use public transport, you can tap a card to buy your sandwiches, you can tap a card to buy anything. Take Sweden for example: It’s one of the fastest countries to go digital. Some of it is technology. But some of it is the fact that actually everybody has a bank account. Everybody trusts the government and the banks will work together. And as a result the banks have all developed seamless technology that, whoever you bank with, you can use and everyone in Sweden can pretty much get banked. Now, if I turn to the U.S., we’ve got a technology adoption issue. It’s much harder to be an innovator in financial services because of the very regional structure of banking. There is a lot more skepticism about the state and about authority that’s sort of inherent in U.S. culture.
Concerns about the shift to digital payments
Craig: Do you think the coronavirus pandemic might force quicker adoption of this kind of technology?
Ceeney: I think it’s absolutely certain that coronavirus will accelerate the shift to digital. It’s raised a big issue, though, because not everybody can use digital. Even in Sweden, there’s been a backlash to the pace of shift to digital payments, because not everybody has the ability to use digital payments. In the U.K., we estimate that 8 million people cannot, at the momen,t use digital payments for a lot of their needs. And as a result, they really need cash. In the U.S., it’s an even bigger population. What COVID has done is absolutely accelerated the shift toward digital. But it’s also shone a spotlight on vulnerability and people who are really getting excluded by our shift to digital.
COVID-19 Economy FAQs
New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?
Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
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