A report recently issued by the Board of Governors of the Federal Reserve System suggests that changes might be ahead for Presidential Dollars and Native American Dollars. If suggested legislative actions are taken, the production levels for each of the series would likely be drastically reduced.
The report (summarized on Coin Update or available here in pdf) describes the growing stockpile of $1 coins held by Federal Reserve Banks, which has now reached more than 1.25 billion and will require the construction of a new storage facility.
The coin hoard continues to grow due to specific requirements of the authorizing legislation for each series.
Federal Reserve Banks are required to make each design of the Presidential Dollar series available to financial institutions in unmixed quantities during an introductory period. At the end of each ordering period, a residual amount of coins remains, adding to the hoard. Financial institutions who actually ordered the coins end up redepositing roughly 40% of them, again adding to the hoard.
The separate Native American Dollar series carries a legislative requirement that the coins represent at least 20% of dollar coin production for each year. Since Federal Reserve Banks are not required to order this series, the coins have been primarily distributed through the US Mint’s Direct Ship Program. Unfortunately, an estimated 60% of these coins are eventually redeposited at Reserve Banks, once again adding to the hoard.
According to the report, the United States Mint has suggested legislative action to remove the 20% requirement from the Native American Dollars series. In the recent past, we have seen that when the US Mint suggests legislative action related to coins, it has taken place. Last year, the Mint requested a change to the law related to Silver Eagle production to allow collector versions to be struck even if full demand for bullion coins was not being met. They also requested changes to the specifications for the America the Beautiful Silver Bullion Coins. Both of these changes were provided under the Coin Modernization, Oversight, and Continuity Act of 2010.
The US Mint has not struck any 2011 Native American Dollars in several months, perhaps in anticipation of legislative action to remove the 20% requirement. According to the most recent production figures, for the year to date Native American Dollars account for about 12% of total dollar coin production.
With regards to Presidential Dollars, the Board of Governors of the Federal Reserve System has suggested removal of the requirement for a mandatory introductory period for each design. Rather than being forced to order each new design, the Reserve Banks could instead use existing inventories of dollar coins to fulfill demand from financial institutions.
If both of these legislative changes are made, it would likely have a dramatic impact on the number of Presidential and Native American Dollars produced each year. With so many coins already stockpiled, production might fall to the minimal levels needed to fulfill demand from coin collectors. This may become similar to the 2002-2008 Sacagawea Dollars, which had mintages of just a few million per year. The coins were not issued to the channels of circulation at all, but rather sold at a premium in US Mint numismatic bags and rolls.
The line up of circulating coinage denominations in the United States would grow even stranger. Of the six denominations, two would cost more than their face value to produce (cent and nickel) and two would only be produced in minimal quantities for collectors (half dollars and dollars).
Update: According to NPR, a California Congresswoman is planning to introduce a bill to immediately halt production of dollar coins. I have not seen the exact language of the bill, but this would seem to immediately end the Presidential and Native American Dollars series, and by extension the First Spouse Gold Coin series.
I am not sure how much support the bill would get. The complete elimination of the programs seems to go too far, especially when only small adjustments would solve the main issue of the growing $1 coin hoard.