Treasury Releases Guidelines to Address Penny Shortage
The U.S. Treasury recently announced updated guidelines addressing the ongoing penny shortage. This response follows President Trump’s earlier directive to cease penny production due to high production costs. The last batch of pennies was minted during the summer of this year, and businesses are now experiencing a shortage.
Treasury’s New Guidelines for Penny Transactions
In light of the penny shortage, the Treasury released a list of frequently asked questions (FAQs) aimed at helping merchants adapt. A key recommendation suggests rounding cash transactions to the nearest five cents. This adjustment is necessary as pennies become less available in circulation.
Current Circulation of Pennies
Despite halting production, the Federal Reserve will continue to circulate approximately 114 billion existing pennies. The longevity of these coins in circulation largely relies on consumer behavior. The Treasury encourages the public to utilize their spare pennies to facilitate a smoother transition.
Legal Considerations for Retailers
While the new guidelines are beneficial, they do not address legal risks associated with rounding cash transactions. Legislators must draft clear policies that provide legal protection for retailers who implement these rounding practices.
Support from Financial Services Committee
Recently, House Financial Services Committee Chairman French Hill (R-AR) reached out to Federal Reserve Chairman Jerome Powell. He urged the Fed to consider a careful approach to the circulation of existing pennies. Hill supports the cessation of penny production, highlighting the need for legislative clarity to ensure consistent cash handling practices.
In their correspondence, the Committee members endorsed the bipartisan Common Cents Act, which aims to provide retailers, banks, and consumers with more definitive guidance. The letter asserted that the current dynamics of supply and demand are hindering the circulation of pennies unnecessarily.
Advocacy for Federal Legislation
The National Association of Convenience Stores (NACS) has been actively advocating for legislation that would permit retailers to round transactions. Their goal is to establish a safe harbor for businesses that adjust amounts due to the diminishing availability of pennies.
- Last batch of pennies minted: Summer 2023
- Approximate pennies in circulation: 114 billion
- Key recommendation: Round cash transactions to the nearest five cents
As the situation develops, NACS will continue to monitor the impact of these changes on retail practices. More updates will follow as information becomes available.
