You’re not the only one trying to get rid of loose change. So is the Federal Reserve.
The 12 banks of the Fed system held $912 million in small-denomination coins at the end of May, a central bank official said Tuesday. That includes $825 million in quarters, which is a near record level for the system run by Chairman Ben Bernanke (right).
The Reserve Banks have been trying to cut their holdings of small-denomination coins, operations and payment systems director Louise Roseman told a House Financial Services panel Tuesday.
Those efforts have reduced penny, nickel and dime orders to the U.S. Mint by 31%, and left the Federal Reserve banks holding their thinnest inventories of those coins in a decade.
At May 31, the Fed held $15 million worth of pennies, $17 million of nickels and $55 million of dimes — a reduced stock Roseman described as “still sufficient to meet demand.” She assured legislators the Fed isn’t in danger of running short on pennies, as it did in 1999 as Americans hoarded cash in the run-up to the turn of the century.
But if the Fed has been able to slim down its holdings of the smaller coins, it is up to its ears in quarters. The Federal Reserve banks held 3.3 billion quarters at the end of May. That is down 13% from last year’s peak but more than double the 2006 level.
Quarter inventories surged during the recession, the Fed said, because the slowdown in economic activity meant banks put fewer coins in circulation. Roseman said the Fed expects to see those reserves decline as the economy picks up.
Meanwhile, the Fed has so many $1 coins and so little consumer demand for them that it is considering spending $6 million to store them all. Since 2001, Roseman said, the Federal Reserve banks have taken 110 million dollar coins into inventory – which is 86 million more than they ordered from the U.S. mint.
As much change as Bernanke & Co. have on hand, it’s a meager fraction of the $40 billion of coins in circulation and stuck in seat cushions, Fed data indicate.