It has been many years since the elimination of a penny. Considering that this costs the Ministry of Finance to cause the coin loss rather than the value of the currency considered inefficient. Additionally, many have cited environmental issues, which have increased pollution problems. However, completely eliminating coins can also have consequences. The debate continues to heat up on both sides. However, other countries have successfully eliminated their lowest coin currency or a cent. The question is whether the United States can eliminate a penny with similar results.
Australia and Canada give examples
Australia and Canada are ahead of eliminating the lowest value coins and achieving good results. Canada saves $11 million a year by eliminating penny production. Despite initial doubts, both countries have successfully eliminated their lowest value coins, with little impact. In Australia, cash transactions were rounded to the nearest 5 cents. Through open awareness campaigns and recycling programs, the transition was relatively smooth.
Why does it make sense to eliminate a penny
According to Robert Whaples, a professor of economics at Wake Forest, “In 2024, U.S. mint causes 3.7 cents to produce and distribute a penny. This means taxpayers are actually subsidizing the production of coins with very little purchasing power. If we get rid of a penny, we can save money, and I think it’s bad. In the air, it’s still time to get rid of it, and if you need to spend two seconds, Americans make money every two seconds.”
The cost of making nickel is about 14 cents, which is much more profitable than 3.7 cents. Why not eliminate nickel? In 2024, less than 70 million nickels were cast, while 3.2 billion pennies were cast. Then the problem with a penny is that many are made and there is no circulation, and nickel is another matter. People are more likely to pay with nickel, but pay a penny. Therefore, the government makes more pennies every year. In fact, there are about 240 billion pennies in circulation.
Consequences to consider
rounding
Rounding can have unintended consequences for consumers, as prices for many commodities will rise. This could lead to more inflation. However, in some cases, consumers will pay less using rounding rules. In many ways, rounding will have no economic impact.
Resist
Although it may reduce transaction time, many businesses have not eliminated a penny. Although a penny has little purchasing power, many systems cannot adapt and require rounding rules. For most companies, there will definitely be a period of adjustment. However, it does encourage electronic payments, while reducing reliance on coins.
Historical significance
Lincoln pennies have been in circulation since 1909, the first real person in the United States to mark Abraham Lincoln’s 100th birthday. Many people object to the elimination of a penny because of their historical significance and nostalgia.
How do you think about eliminating a penny? Do you think this would be a wise move or a financial mistake? Let us know what you think in the comments.
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