Two cents on Canada’s penny problem
blog by Kathryn Przybyla • March 30, 2012 @ 10:29am
Looks like my change drawer is full of limited edition collector’s items now.
So exactly how much money with the Canadian government be saving with ceasing production of the penny? Approximately $11 million per year is a good estimate, according to CNN.
Written in the new budget, a Canadian penny is costing the government 1.6 cents for every new coin. Although production on the pennies will stop this fall, the coins will still be valid currency to use in transactions. Saving money is a good step for the Canadian government, but some retailers and consumers are weary about the change. The elimination of the penny will eventually lead prices to round up to the nearest five cents, rather than pricing an item at $1.99.
With our friends to the border, getting rid of everyone’s favorite currency to toss into a fountain, will the United States follow suit? According to the United States Mint,
It has not been confirmed that the penny has outlived its usefulness. Neither business nor the public as a whole has pressured for changes in the coin denominations in circulation today. In addition, our coin and currency system is among the most trusted in the world.
The vast majority of users apparently are content with the existing coin denominations, including the one-cent coin. As a result, the Treasury Department has no plans now to cease production of the penny. In addition, such a change to the United States monetary system could not be done without prior Congressional authorization.
If directed to do so by legislation enacted by the Congress and signed by the President, the Treasury Department would again study phasing out the penny. Since the demand exists and the Federal Reserve Banks require inventories to meet the demand, the United States Mint is committed to producing the penny.
How will Canadian’s feel about the demise of the penny? Check out this story from CBC The National:
Photo courtesy of Flickr / MiguelB