What Becomes Of Coins Sitting In Bank Vaults?

The Royal Australian Mint keeps about 1 1/2 years of stock coins in reserve, for issue into circulation as required by the commercial banks. The RAM hold them on behalf of the Australian Treasury.

In terms of coins intended for mass circulation, I would assume the U.S. policy is not much different to the Australian.

Bullion coins, such as sovereigns have little relevence, and most have long since been melted.
Physical gold reserve is almost completely in the form of bullion bars.

I was watching some business channel CNBC mentioned the Fed Reserve is paying this huge Atlanta bank a massive rental fee for vault space to house like about 10 million brand new Susan Antony dollars, so one would assume these coins don't get recycled.

Actually the banks try not to have a lot of coins sitting in the vaults. Nor fo they have a lot of paper money there either. They try to have no more sitting around than they need for day to day business, with a small buffer amount just in case there is an unusual bump in daily outflow (You NEVER want to have a case where you can't come up with the cash when demanded if you are a bank). Amounts over that are shipped out as deposits to their parent banks and from the parent banks to their accounts at the Federal Reserve. Money just sitting in the bank vault is a dead asset. It is just sitting there taking up room and not earning anything. Surplus money shipped out and deposit can be used to make loans and return income from interest. A lot of the larger banks make money this way from making overnight loans to banks on the other side of the world. $100M loaned overnight at 1% per annum generates close to $3K in income.

Now once surplus cash reaches the Fed it may just sit there for awhile. But if too much starts piling up they stop placing orders for new coins or currency from the Mint and BEP. The Fed tend to ship out circulated coins before new ones. So if you are getting a lot of brand new coins from your bank all the time that means the Fed stockpile is low and they are shipping out more coins than are coming back in from the banks.

So where do all the coins go? Lost or in change jars all over the country. I know that sounds ridiculous, but if you do the math it turns out the average family of four only has to lose or remove from circulation four coins a WEEK to consume the entire annual mint production.

There's a much smaller overhang of coins "in the system" then most people realize. The FED and mint trade out coins that have been in storage the longest. This is usually only about a 1 1/2 year supply but it can get up to around three years before all the coins turn over. Indeed, during huge changes in demand as in 2008 Coins appear to have gone into storage in some areas for as long as five years. Small imbalances will be corrected by shipping used coin from district to district or simply curtailing deliveries of new coin.

There is a huge overhang held by the public but this overhang tiurns over very rapidly. When times are good the change jars and piggy banks fill up more and when they're bad they are at lower levels. Now that coins have so little value it's a little more complex. But this overhang is still small relative the total number of coins in circulation. If they've made some 50 billion clad quarters then about 12 billion no longer exist. A billion are in federal hands. And three billion in change jars. Each year a few hundred million more are lost or destroyed and the economy requires another net increase of about half a billion.

Mintages are adjusted to reflect this discrepancy and projected demand.

Here in Canada, now, banks simply do not have large numbers of coins sitting around. First of all, their vaults are not very big and I think quite a lot of the space is for Safety Deposit Boxes.

As Someone pointed out, it is also simply poor economics to sit on heavy piles of cash.

Not quite 100M... there is 7c or so in the cost, the profit that is recorded when a coin is 'issued' is like 93c.

Not sure when the USPS records the asset, whether it's at the time of creation or sale.

If you have $100 in your pocket and your pants burn up, don't you lose $100?

Sure, they are still valid coins. At one time the Fed operated on a last in first out inventory system and if a lot of old coins were being returned by banks they would go out before new coins sitting in the vaults. New coins from the mint would also go out before the older new coins. Some times those new coins wouldn't go out for a long time. Today the procedure is circulated coins first, then the oldest non-circulated coins, then the new coins.

I don't think 'The Fed' has a policy. They have outsourced the handling of coin to private contractors (e.g. Loomis). Coins are delivered from the mint in balistic bags. It's the coin terminal that wraps them, distributrs them to banks, picks up extra coins from the banks. And thus is't the coin terminals that decide which to distribute first.