The Federal Reserve to Resume Accepting Penny Deposits
The Federal Reserve, America’s central bank, has announced that it will recommence the circulation of pennies for commercial use at all of its coin distribution locations. This decision comes as a response to pushback from the banking industry, which was prompted when some commercial coin distribution sites ceased accepting penny deposits in late 2021.
According to a statement from Federal Reserve Financial Services, the Fed’s payment and settlement arm, the central bank will begin accepting pennies from banks and credit unions from mid-January. The agency stated: “Beginning Jan. 14, the Federal Reserve will resume accepting pennies…providing services under arrangements with the Federal Reserve that were previously suspended.”
Why The Change?
The Federal Reserve’s move to stop accepting penny deposits at some sites last fall was met with criticism from the banking industry. This is because the penny shortage has complicated routine tasks for retailers and consumers, such as cashing checks and providing exact change.
Local inventory constraints had limited activity at some coin distribution locations, leading to the halt in accepting pennies. However, the Federal Reserve Financial Services stated that it continues to support penny deposits and that the flow of these deposits from financial institutions would determine whether some subsequent expansion of ordering options for pennies is feasible.
The Impact of The Decision
The decision has been applauded by key figures in the banking industry. Rob Nichols, president and CEO of the American Bankers Association (ABA), said, “This important step directly addresses the concerns we previously raised and will help ensure banks are able to accept and process pennies during the transition away from new penny production.”
He further added that by reopening these channels, the Federal Reserve is taking practical action that supports consumers, retailers, and financial institutions alike. The decision is expected to strengthen coin circulation across the nation.
The Penny Production Halt
In February 2025, the Trump administration announced plans to end penny production, and the Treasury Department placed a final order for blank pennies in May. Since then, large-scale minting of pennies came to an end between June and August, causing penny circulation to slow sharply.
Moreover, the Federal Reserve also stopped redistributing existing pennies at coin terminals, creating logistical challenges for banks and retailers. In a November interview, Steve Kenneally, senior vice president of the ABA, explained the predicament saying, “Banks can’t get pennies, and that means they can’t supply them to their customers — the retailers — and that puts the retailers in a jam.”
The Industry Outcry and Response
In reaction to the refusal of the Federal Reserve to accept banks’ excess penny deposits at coin terminals, the ABA sent a letter in October urging the federal government to fully reopen all coin terminals, provide clear guidance on rounding transactions, and educate the public about the situation.
Following the industry outcry, congressional Democrats, including Senator Elizabeth Warren and Representative Maxine Waters, sent a letter in December calling on the Treasury Department and the Federal Reserve to provide guidance on the issue. They expressed concerns about a lack of communication with consumers, businesses, and lenders regarding the supply of one-cent coins.
In late December, the U.S. Treasury Department issued guidance on rounding cash transactions to the nearest nickel, further highlighting the critical importance of pennies in everyday transactions and the need for action.
With the Federal Reserve’s decision to resume accepting penny deposits, it is expected that the current penny shortage will be addressed, easing the burden on retailers, consumers, and financial institutions alike.
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