On Thursday, Federal Reserve Financial Services (FRFS) said that beginning on Jan. 14, it will resume accepting pennies from banks and credit unions at commercial coin distribution locations under their previous agreements.
Banks and credit unions were not depositing or requesting as many pennies as usual from the Fed due to the shortage of physical pennies in circulation. The Fed will monitor penny deposits as the new services begin and might expand ordering options if the supply allows, noting that the U.S. Mint has stopped producing pennies.
The Federal Reserve distributes coins only to banks and credit unions on behalf of the U.S. Mint, which is the official issuer of coins. The Federal Reserve does not provide coins directly to businesses or the public.
On Dec. 23, The U.S. Department of the Treasury posted a Penny Production Cessation FAQs on its website offering guidance to convenience stores and other retailers regarding the penny no longer being produced.
The Federal Reserve will continue to recirculate the approximately 114 billion pennies currently in existence for as long as possible, according to the Treasury’s FAQs, noting, “How long existing pennies remain in circulation depends largely on consumer behavior.”
As pennies fall out of circulation, merchants will need to round transactions up or down to the nearest 5 cents, the Treasury said.
The Secretary of the Treasury suspended production of the 1-cent coin, with the final penny pressed Nov. 12., after determining it was no longer needed—and becoming increasingly expensive to make. The cost to produce the penny has increased from 1.42 cents to 3.69 cents per penny, according to the United States Mint.
NACS has been strongly advocating for federal legislation that would allow retailers to round up or down to the nearest nickel and provide a safe harbor for retailers who round. NACS previously met with Treasury officials and sent a letter to the Senate Banking and House Financial Services Committees urging them to pass federal legislation to allow businesses to continue carrying out cash transactions as issues arise.
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