For the third consecutive year, the unit volume of United States Mint circulating coin shipments to Federal Reserve Banks rose, however a shift in denominations resulted in a decline in the value of these shipments. For FY 2012, the US Mint shipped 9.08 billion coins representing an increase of 22.8% compared to the prior year. The value of the shipments was $493.3 million representing a decline of 36.5% compared to the prior year.
This article is part of ongoing coverage of the US Mint’s 2012 financial results.
The United States Mint produces circulating coins which are shipped to Federal reserve Banks in quantities necessary to replenish inventory and meet demand from commercial banks and financial institutions. The banks and financial institutions distribute coins to meet the demand of retailers and the public. In times of excess supply, circulating coins may be returned to Federal Reserve Banks, where they are held in inventory and serve to reduce orders for new coins.
The Mint recognizes revenue based on the face value of circulating coins as they are shipped to Federal Reserve Banks. Seigniorage is generated from the difference between the face value of the coins and the cost to manufacture and distribute.
Unit Volume of Circulating Coin Shipments to FRB
|(in millions)||FY 2012||FY 2011||Change|
The unit volume of cents, nickels, dimes, and quarters shipped to Federal Reserve Banks all showed an increase for the latest fiscal year. The largest increase was experienced for the shipment of quarters, up 50.46% compared to the prior year. Following the conclusion of the 50 State Quarters Program, Federal Reserve Banks held a surplus of quarters, which minimized the need for production and shipment of new coins. The surplus appears to have finally been worked down, resulting in the need for increased shipments. The Mint has indicated that they expect production levels for the quarter to continue to rebound in the coming years.
The production of the cent also showed a sizable increase with more than 5.8 billion units shipped. The smallest denomination accounted for 64.2% of all circulating coin shipments during the fiscal year, up from 58% of all shipments for the prior year.
The $1 coin saw shipments fall to 97 million units compared to 467 million units in the prior year. This was a result of the Treasury Department decision in December 2011 to suspend production of circulating Presidential $1 Coins. From the start of the program in 2007, Federal Reserve Banks ordered sufficient quantities of each release to meet initial demand from financial institutions. A high percentage of $1 coins which financial institutions eventually returned to Reserve Banks resulted in a stockpile of more than 1.4 billion $1 coins, which was not deemed to be a prudent use of taxpayer resources.
The US Mint continues to produce Presidential $1 Coins for distribution through their numismatic channel. The 97 million coins shipped during the latest fiscal year represent shipments of the James Garfield Presidential Dollars prior to the Treasury Department decision.
Value, Cost, and Seigniorage of Circulating Coin Shipments
|(in millions)||Cent||Nickel||Dime||Quarter||$1 Coin||Mutilated & Other||Total|
|Value of Shipments||58.4||50.3||165.8||121.7||97.1||493.3|
|Les Gross Cost||(116.4)||(101.5)||(82.7)||(54.9)||(20.5)||(11.4)||(387.4)|
The cost of producing and distributing both cents and nickels exceeded their respective face values. These two denominations generated losses of $58 million and $51.2 million for the year. Acting Director Richard Peterson stated, “This negative seigniorage concerns us, and we continue to explore ways to address it.”
The Mint recently released the findings of a two year study to explore alternative coin materials. The Mint’s conclusion from the study was that additional work would be required before any specific recommendations could be made for changes in circulating coin composition.
For the 2012 fiscal year, the losses from the cent and nickel were more than offset by the seigniorage generated by the remaining denominations. Overall, the US Mint shipped circulating coins worth $493.3 million, which generated seigniorage of $105.9 million.
The unit cost of producing each denomination was 2.00 cents for each cent, 10.09 cents for each nickel, 4.99 cents for each dime, 11.30 cents for each quarter, and 21.11 cents for each $1 coin.