Yes the currency is currently semi digital, but at the end of the day you can take your cash out. Why would this be important? Negative interest rates.I hadn't heard of it, but we *have* essentially created a semi-cashless system. With the lockdown, most of the economy has become digital. You could still pay cash for food at the grocery store in theory. But that assumes you are working and not living off a stimulus check or public assistance benefit that is direct deposited. And that you're not afraid of currency transmitting the virus.
It would help if you post some confirmed and/or news sources so everybody will know what's going on.What do my fellow forum members make of the supposed coin shortage in the US? Move to cashless society?
June 11, 2020
Temporary coin order allocation in all Reserve Bank offices and Federal Reserve coin distribution locations effective June 15, 2020
The COVID‐19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin. In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly and the U.S. Mint’s production of coin also decreased due to measures put in place to protect its employees. Federal Reserve coin orders from depository institutions have begun to increase as regions reopen, resulting in the Federal Reserve’s coin inventory being reduced to below normal levels. While the U.S. Mint is the issuing authority for coin, the Federal Reserve manages coin inventory and its distribution to depository institutions (including commercial banks, community banks, credit unions and thrifts) through Reserve Bank cash operations and offsite locations across the country operated by Federal Reserve vendors.
The Federal Reserve is working on several fronts to mitigate the effects of low coin inventories. This includes managing the allocation of existing Fed inventories, working with the Mint, as issuing authority, to minimize coin supply constraints and maximize coin production capacity, and encouraging depository institutions to order only the coin they need to meet near‐term customer demand. Depository institutions also can help replenish inventories by removing barriers to consumer deposits of loose and rolled coins. Although the Federal Reserve is confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns, we recognize that these measures alone will not be enough to resolve near‐term issues.
Consequently, effective Monday, June 15, Reserve Banks and Federal Reserve coin distribution locations began allocating coin inventories. To ensure a fair and equitable distribution of existing coin inventory to all depository institutions, effective June 15, the Federal Reserve Banks and their coin distribution locations began to allocate available supplies of pennies, nickels, dimes, and quarters to depository institutions as a temporary measure. The temporary coin allocation methodology is based on historical order volume by coin denomination and depository institution endpoint, and current U.S. Mint production levels. Order limits are unique by coin denomination and are the same across all Federal Reserve coin distribution locations. Limits will be reviewed and potentially revised based on national receipt levels, inventories, and Mint production.
COLUMBIA — The United States Federal Reserve earlier this month said the country is facing a coin shortage.
A June 11th press release from the Fed said the shortage was caused by mints shutting down temporarily due to COVID-19 restrictions.
"The COVID19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin," the release said. "The Federal Reserve is working on several fronts to mitigate the effects of low coin inventories."
To combat the shortage, the Fed implemented what it called a "strategic allocation of coin inventories." This distributes the coin that the Reserve has to institutions nationwide based on "historical order volume by coin denomination and depository institution endpoint, and current U.S. Mint production levels."
While it may seem like the lack of coin is yet another dramatic shortage caused by the virus, Dan Westhues, executive vice president for Central Bank, said that might not be the case.
"Is it a huge issue? No, it's not. This isn't like the 'new toilet paper issue,'" Westhues said. "There are different payment mechanisms available, which minimizes the reliance on coin."
Banks, stores, and other institutions get their coin primarily from two sources: the Fed and from customer exchanges. While the Reserve's mints play catch-up, Westhues said people using the coin they have laying around the house, in their pockets or in their car can help those institutions keep their coin levels more stable.
Some corporations, such as Oklahoma-based QuikTrip, are actively encouraging customers to pay with their spare change.
"Everyone of us has got coins in our car console, on our dresser or in our piggy banks," QuikTrip spokesman Mike Thornbrugh said. "When people start redeeming them, it won't take long to get back to normal.
The gas station chain has signs in its stores asking customers to pay in exact change, by card or by contactless payment. Customers who need change will be given gift cards to further avoid using coins.
Thornbrugh said while the shortage may pose a minor inconvenience for the time being, QuikTrip isn't too worried.
"We’re not concerned that it’s going to be a long-term issue. Everybody has coins, either in their pockets, their car or wherever," Thornbrugh said. "The consumers are really reacting positively, and they’re bringing their coins in, which is really helping out."
Until the Reserve is able to refill the supply, and no knows for certain when that will be, paying electronically and using spare change just makes sense.
Authored by Claudio Grass,
The corona crisis has already taken a very high toll and caused deep damage in our societies and our economies, the extent of which is yet to become apparent. We have seen its impact on productivity, on unemployment, on social cohesion and on political division. However, there is another very worrying trend that has been accelerated under the veil of fear and confusion that the pandemic has spread. The war on cash, that was already underway for almost a decade, has been drastically intensified over the last few months.
Over the last years, and as the war on cash escalated, we’ve gotten used to hear certain arguments or “reasons” on why we should all abandon paper money and move en masse to an exclusively digital economy. These talking points have been repeated over and over, in most western economies and by countless institutional figures. “Cash is used by terrorists, money launderers and criminals” is arguably the most oft-repeated one, as it’s been widely employed in most debates about the digital transition. Just a couple of years ago, it was also used by Mario Draghi, to support the decision to scrap the 500 euro note. We didn’t get any specific information or data about how many terrorists were actually using this high-denomination note, but we do know a lot of law-abiding citizens were using it to save, as did small business owners for their operational liquidity needs.
Now, however, the corona crisis has introduced a whole new direction of anti-cash rhetoric and fresh arguments in favor of a digital economy. Even in the early stages of the pandemic, when essentially nothing was concretely known about the virus itself or its transmission, the seeds of new fears were already planted by sensational media reports and fear-mongering political and institutional figures. The insidious idea that “you can catch Covid through cash” might have been prematurely spread, but it did stick in most people’s minds. This is, of course, understandable, given the extremely high levels of uncertainty and anxiety in the general public. Wanting to eliminate potential threats was a natural instinct and so was the urge to take back at least some control over our lives, after they’d been suddenly thrown into utter chaos in the wake of the global economic freeze.
Another factor that concretely helped the shift away from physical cash was an entirely practical one. Given the lockdown measures and the new “social distancing” directives that were enforced all over the world, it became difficult to use cash, even if you really wanted to, or had no other means of transaction, as is the case for billions of people. With physical stores being forced to shut down and with more and more online shops offering contactless delivery (either as a choice or as a service requirement), the need for cash very quickly gave way to digital payments.
For most of us, who have access to online banking, cards or other digital payment services, this introduced no real inconvenience and we probably didn’t even give it a second thought. However, for many of our fellow citizens it was a serious impediment, which in some cases blocked their access to basic goods and essential supplies. Contrary to the glowing promises of the digital economy, of financial inclusion and convenience, the fact remains that there are still millions of people who simply do not have access to this brave new world. According to figures by the World Bank, globally there are 2.5 billion people with no bank account, with a high concentration in the developing world. In the West too, however, there is a very large part of the population that is unbanked and/or has no access to digital solutions, while the elderly are also to a very large extent “locked out” of the digital economy. For all these millions of people, cash is the only way to save, to transact and to cover their basic needs.
With cash being presented not just as a danger to society and to national security, but also as a direct health hazard due to the coronavirus, the push towards digital alternatives has been massively reinforced over the last few months. Both international organizations and individual governments have actively participated and encouraged this push, some through public guidance statements and others through the blunt enforcement of direct rules and measures that leave no real room for their citizens to make their own choices.
The CDC in its official guidance to retail workers recommenced that they “encourage customers to use touchless payment options”, while a report by the Word Bank highlighted the need to adopt cashless payments for the sake of “social protection”. The UAE Central Bank encouraged the use of online banking and digital payments “as a measure to protect the health and safety of UAE residents”, and the Bank of England has acknowledged that banknotes can hold “bacteria and viruses” and recommended that people wash their hands after handling money. In March, a report from Reuters revealed that the U.S. Federal Reserve was quarantining dollars that it repatriated from Asia and so did South Korea’s central bank, while banks in China were forced by the government to disinfect bills and keep them in a safe for up to 14 days, before putting them in circulation.
A highlight, however, came in May, when the World Economic Forum published an article in its “Global Agenda” strongly supporting the mass adoption of digital payments, for the sake of public health. In it, the authors argue that “contactless digital payments at the point of sale, such as facial recognition, Quick Response (QR) codes or near-field communications (NFC), can make it less likely for the virus to spread to others through cash exchanges.” They also applauded the efforts of China in digitalizing payments and appeared to hold the country and its measures as a model to be emulated: “China’s path to enabling digital payments should provide some lessons to other countries eager to follow suit.” Since a number of Western governments may indeed be “eager to follow suit”, let us take a closer look at this bright example and examine what it really entails.
Fiat money 2.0
The digitalization drive in all aspects of the Chinese state, society and economy is nothing new and it certainly predated the emergence of Covid-19. The country’s infamous “social rating system” has made headlines years ago and the government’s eagerness to use technology, the internet and all sorts of digital systems to track its citizens’ behaviors and affiliations has long attracted International criticism and widespread condemnation by human rights organizations, privacy advocates and free speech supporters. Now, however, the state has been given a reason to accelerate its efforts in the mass adoption of digital payments and the abandonment of cash.
To a large extent, this digitalization of payments task was much easier in China, as digital payments there are already very widespread in the population. More than 80% of consumers already used mobile payments in 2019, according to management consultancy Bain, a sharp contrast with the US that had adoption rates of less than 10%. So, as the population has already accepted a new way of payment, the new initiative sought to dominate the means of payment too. Thus, a new “digital yuan” was introduced. This new fiat currency, that has been in development for over 5 years, was rolled out in April in four Chinese cities with a plan for national adoption soon, so that it eventually replaces the physical legal tender.
This so-called Digital Currency Electronic Payment (DCEP) will be put into circulation through China’s big four state banks and citizens will be able to receive and use it by downloading an electronic wallet application authorized by the People’s Bank of China (PBOC), which will be linked to their bank account. On the surface, it appears to work just like the old currency. It is issued and backed by the PBOC, it’s valued the same as the physical banknotes and, thanks to partnerships with Alipay and WeChat Pay, that control 80% of the country’s payment market, it will be used to get paid by anyone and to pay for anything. In fact, some public servant salaries and state subsidies are already being paid out in this new digital yuan, arriving in their intended recipients’ digital wallets.
According to China’s state media People’s Daily, the new currency is meant to simplify domestic transactions and trade, but it will also facilitate and ease cross border transactions. The implication there is clear: It is yet another attempt to challenge the global dominance of the USD, after the Belt and Road initiative failed to really move the needle as the Chinese state had hoped. The strategy of spending of huge amounts of Chinese money abroad did provide some leverage over developing countries, but it didn’t come anywhere near “dethroning” the Dollar and internationalizing the Renminbi. Perhaps, this initiative will fare better, especially as it now has the “first-mover” advantage.
Entering this “digital fiat” arena first is hugely important and the timing of the currency’s launch was no coincidence. The development and the rollout plan were significantly accelerated following Facebook’s announcement of the Libra, as the Chinese state wouldn’t have the private tech giant beat them to the punch. In fact, the digital yuan resembles the Libra in many ways. Most importantly, neither of them is a cryptocurrency, which is decentralized by design and allows for peer to peer transactions without the need of an intermediary or third party. In this case, the issuer is the third party and all transactions go through a very centralized system that controls and has access to all the data. In another non-coincidence just a few years back, China’s government banned initial coin offerings and placed great burdens on cryptocurrencies and crypto-investors making it very hard to operate in the country, thereby dismantling the threat of potential competition from the private sector and clearing the way for its own digital coin.
The "melt value" of a quarter is about 4 cents. That's a pretty poor investment to spend 25 cents to get 4 cents of metal.Less coins being used due to lockdown and scaremongering over germs. Paper cash is as good as toilet paper if the currency goes to 0. Coins still have value in their metals. The Fed is not printing vast sums of coins because they know this to be the case.
The last time I looked into using bitcoin, I wanted to make a purchase of about $60. There was going to be a transaction fee of something like $8 to process the payment, which I was told went to the miners who were being compensated for running the algorithm on their machine that allowed the transaction to go through. It was also going to take hours for the money to clear. Bitcoin struck me as completely not feasible for a payment system, and I ended up taking another route. Does bitcoin still have these types of onerous fees for transferring money?Bitcoin fixes this.
Yep.Yes the currency is currently semi digital, but at the end of the day you can take your cash out. Why would this be important? Negative interest rates.
As everyone knows the Federal Reserve can't make interest rates any lower because the rate is basically ZERO. But if you have a negative interest on your bank account, they CAN lower interest rates more. This is where a pure digital currency comes into play.
If they institute negative interest rates with paper currency, people will pull their currency out of the banks, and the banks can't have that. They need their deposits, a run on deposits is the worst thing that can happen to a bank.