I was surprised to read this article that also shows that the supply disruptions also made their way to the common US coin markets as well. This means that even commonly used coins like pennies, nickels, dimes, and quarters have been facing shortages. This was weird for me as they are all over the place considering them being so transactional in nature. However, the article gave some interesting perspectives I had not considered in the past but also led my to the thought of how important the digitalization of assets will increasing become important over time.
The articles presented a number of interesting reasons of this disruption. First, customers are the main source of coins in the financial system. Customer bring their change in rolls to banks as they accumulate. This was strange for me as I thought that transactions would have been constrained enough to avoid that dislocation. Also, many believe that many would not want to transact in coins as many believe that the transmission of germs are more likely with these assets than others. However, that left me thinking about where the demand would come from as it is mostly businesses that extract coins from the banking system. Given the lockdowns, I would have not expected demand to have been high enough to cause a shortage.
While the supply was contained due to manufacturing stopping for a short time, the amount of coins needed to distribute come online much quicker than expected as businesses begin to open. Considering that many business like supermarkets and pharmacies remained open no matter the situation, the amount of need for coins outpaced the supply relatively quickly. Therefore, this was a unique situation that coins were demanded not for their content or value but instead their transactional use (different from the precious metals market experience).
This led me to wonder a number of things to consider. Could this have also been due to the enormous amounts of liquidity being injected into the financial system by the Fed and Government? The trillions of dollars being printed and circulated are unprecedented and given they have been distributed with the purpose to provide stimulus via transactions, it makes sense that it could have led to these shortages as well. It also encourages me to think that electronic and digital solutions will continue to see adoption in these circumstances. This brings potential and opportunity to digital assets like cryptocurrencies which is exciting considering the development seen in that sector. It may take time but the foundation has surely been laid for growth!
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In Finland, most businesses (most were open - other than restaurants and bars) went with "card only" purchases, no cash at all.
I have only seen the banks suggest the shortages; however, I think that most businesses are also highlighting the "contactless" payment given the health situation.
Finland has been largely cashless by "choice" for almost 2 decades - Germany/Austria is still very much using cash. I think there are ulterior motives to go cashless as it takes away the physical checks and balances of spending - but hopefully the continued result is that it primes people for crypto.