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The Ghost of Monies Future

The COVID-19 pandemic has changed our personal and professional lives. We now need to rethink and consider how, where and when we will take actions in our daily lives. The pandemic has affected how we conduct business for ourselves and on behalf of and for our respective companies

Currency Shortage Challenges and Opportunities

Recently there has been several articles highlighting the challenges and opportunities that pandemic has posed. One talks about an interesting and challenging issue of a currency shortage brought about by the lack of spending and the decline in the use of cash caused by the COVID-19 crisis. The other looks at a new type of currency that is gaining more recognition and potential adoption.

With a tip of the hat to the movie The Christmas Carol, I am calling this the ‘Ghosts of Monies Future’.

The Piggybank Dilemma

Owing to the pandemic, more consumers are staying home, doing their shopping online, and avoiding the use of physical currency causing coins to accumulate in piggybanks, jars, and other assorted places, rather than in banks and retailer cash registers.

The United States Mint is asking the American public to start spending their coins to help and alleviate the coin shortage prompted by the coronavirus pandemic. COVID-19 has led the Federal Reserve Bank to start rationing penny, nickel, dime and quarter coins (1) and are pleading with customers to break open their piggybanks to inject more coins into circulation.

How Customers Can Benefit from Cracking Open the Piggybank

This coin shortage has led to some creative and novel ways that merchants and financial institutions are enticing their customers to part ways with their hidden treasures …here are just a few examples:

  • Local Banks and Credit Unions are offering a “bounty” to their customers and non-customers to exchange coins for cash, with no fees. These coin buy-back offers typically provide customers an additional 10% for all coins turned in.(2)

  • Some well-known retailers are offering “bonuses” in the form of free drinks or sub sandwiches to customers who turn in rolled coins.(3)

Further some are again calling for the demise of the penny coin. It has cost the US Mint more to make and ship pennies than they are worth because of the rising cost of metals. According to the Mint’s Annual report in 2019, it cost 1.99 cents to make each penny, leading to a loss of more than $72 million on the 7.3 billion pennies shipped during the year. The same is true of nickels, which cost more than 7 cents to make.(4)

​​At the same time there is now renewed interest in cryptocurrency and Central Bank Digital Currencies (CBDC). A recent report from ING Bank notes that “COVID-19 will accelerate, not slow, CBDC developments”.(5) The two authors of the ING report further state, “Our initial assessment is that CBDC will be a more likely option post-COVID-19. The bigger role of governments and the close cooperation between them and the financial sector in combating the economic fallout will guide discussions about CBDC in the context of the role the financial sector has in serving society.”(6)

A recent report from the Bank for International Settlements states: “One option at the frontier of policy opportunities is the issuance of CBDCs, which could amount to a sea change. CBDCs could offer a new, safe, trusted, and widely accessible digital means of payment.”(7)

Recently a United States Congressman for Arizona introduced a bill in Congress known as the “Cryptocurrency Act of 2020”.(8) The bill clarifies which United States federal agencies regulate which type of crypto assets. The aim of the bill, according to its text, is to “clarify which federal agencies regulate digital assets, to require those agencies to notify the public of any federal licenses, certifications, or registrations required to create or trade in such assets, and for other purposes”.(9) The lawmaker noted “By providing much-needed regulatory clarity about cryptocurrency, we will make it easier for businesses, institutions, and everyday Americans to participate in this growing industry. No more murkiness, uncertainty, or confusion.”(10)

Where Do We Go from Here?

The sad reality is that COVID-19 and its impacts will be here for the foreseeable future and each of us have alter our daily lives to be a part of this new world order.

So, let us begin by taking the first steps—stop being a Scrooge and hoarding those coins! Share them with those needy merchants and banks! Admit it …you have finally found a way to get rid of them and maybe profit (albeit in a small way from doing so).

The growth and acceptance of CBDC’s is a becoming a reality on a global level. Those who embrace this new currency will gain advantages. Some are comparing this initiative to the advent of the internet and smartphones, which ushered in a wave of innovation and ingenuity in the way people and businesses can transact.

The time is now to consider your choices—are you content living in the world of the ghosts of monies past and present? Or are you looking forward and planning for the ghosts of monies future?

Barry Tooker

iSoftware4Banks, Inc.

Chief Product Officer & Global Head of Product Management

(1) https://www.cato.org/blog/where-have-all-coins-gone

(2) https://gvwire.com/2020/07/15/as-coin-shortage-persists-some-banks-pay-a-bounty-for-small-change/

(3) https://www.cnbc.com/2020/07/28/chick-fil-a-locations-offer-free-food-for-coins-amid-national-shortage.html

(4) https://www.usmint.gov/wordpress/wp-content/uploads/2020/01/2019-Annual-Report.pdf

(5) https://think.ing.com/articles/how-will-covid19-impact-digital-currency-developments-going-forward/

(6) https://think.ing.com/articles/how-will-covid19-impact-digital-currency-developments-going-forward/

(7) https://www.bis.org/publ/bisbull03.pdf

(8) https://news.bitcoin.com/cryptocurrency-act-of-2020/

(9) https://news.bitcoin.com/cryptocurrency-act-of-2020/

(10) https://news.bitcoin.com/cryptocurrency-act-of-2020/

iSoftware4Banks Inc.

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