A Penny for Your Thoughts - But Not in Canada

[Gaybutton]

Canadian Pennies to be Removed from Circulation

Published March 29, 2012

Canada will withdraw the penny from circulation this year because it costs more to produce than its face value, the government announced Thursday.

"Pennies take up too much space on our dressers at home. They take up far too much time for small businesses trying to grow and create jobs. It costs taxpayers a penny-and-a-half every time we make one," Finance Minister Jim Flaherty told AFP.

"We will, therefore, stop making them."

The Royal Canadian Mint will cease distribution of pennies in late 2012, AFP reports.

The penny reportedly retained only a 20th of its original purchasing power, Reuters reports. The Canadian government will save around $11 million a year by withdrawing the one-cent coins from circulation.

"Financial institutions face increasing costs for handling, storing and transporting pennies. Over time, the penny's burden to the economy has grown relative to its value as a means of payment," the government said in a budget document cited by Reuters.

The penny can continue to be used in payments, but as they are gradually removed from circulation, prices for cash will be rounded up or down to the closest five cents, Reuters reports.

http://www.foxnews.com/world/2012/03/29 ... z1qbfDt5hq

[thaiworthy]

The penny can continue to be used in payments, but as they are gradually removed from circulation, prices for cash will be rounded up or down to the closest five cents, Reuters reports.

I suspect more prices will be rounded up than rounded down. Therefore, it might be interesting to speculate on how this will affect inflation.

[crabby]

Would like to see the USA do the same.

[lvdkeyes]

When I was in the USAF stationed in England back in the early 60's we weren't allowed to have any US pennies because they were the same size as a 6 pence coin and would work in vending machines. A 6 pence coin was worth about 7 US cents at that time. There was never a problem about rounding off; it seemed to work out evenly.

[christianpfc]

Long time ago (actually, less than 50 years for Germany), the smallest coins (1 penny, 1 Pfennig) were made of copper, then replaced by copper plated iron because copper became more expensive, and now even iron is too expensive! That's inflation. I wonder how long it will take until 1 Euro-cent will be withrawn because he metal is worth more than it's nomination.

[Rogie]

I suspect more prices will be rounded up than rounded down. Therefore, it might be interesting to speculate on how this will affect inflation.

I'll come on to the point you raise Thaiworthy, but first a canter through the Canadian cent's history, as I have a rather soft spot for them!

1920 was an interesting year. Before then the Canadian cent was about the size of a quarter and what we now refer to as the 'nickel' was a tiny silver coin. After 1920 both these coins became identical in shape and composition to their American equivalents. An exception was the Newfoundland 5c coin which stayed at the pre-1920 size until 1949 when Newfoundland became the tenth province to enter the Canadian Confederation.

As I kid living in Canada I managed to build up a decent collection of pennies and nickels simply by checking my change and that of my family and friends. I was only interested in pennies and nickels as I couldn't afford to collect higher value coins. I got most of the pennies but my dream was to stumble across the extremely rare 1936 penny with a dot under the date. Needless to say I never did. Neither did I ever find a 1925 nickel and to this day there is a gap in my coin holder where it should be.

As for the possible repercussions of ditching the Canadian cent coin perhaps what happens in Australia can give us a clue. Despite having long since gotten rid of their cent coin, the smallest coin now being the 5c one, prices are often given to the nearest cent, so for example a bottle of wine I bought on a recent visit there cost me Aus$ 7.99. That was the price clearly displayed on the shelf. At the check out I paid with a $10 note and got $2 change as expected. However, on inspecting the receipt I noticed the item was charged as $8, rather than $7.99. Now I know this is chicken-feed, Aus 1c being worthless on its own but add up all those cents and that's serious money. As a matter of principal, I would like to see prices in any country to be in multiples of the smallest coin, so in Australia that bottle of wine should be $7.95 or $8, whereas in the US or the UK 7.99 would be perfectly ok.Rant over!

[neddy3]

Australia got rid of its 1c and 2c coins years ago.

They were certainly more trouble than they were worth, and I think that most prople were happy to see the end of them.
Prices were to be rounded to the nearest 5c, and generally this has worked very well. I don't remember any great outcry about the rounding process.

As Rogie correctly observes, shops still advertise items for prices like $4.99! Why?
Does anybody really fall for the look of being less than $5?
Especially as you need to get out $5 to buy this item!

[Captain Kirk]

The UK 1p should see the same fate. Also would add in the Satang in Thailand. None of the Thai folk I met give those coins houseroom.