Canada long ago abandoned its dollar bill and now has Loonies and Toonies instead. It’s easier to buy a soda from a vending machine or feed a meter with coins in larger denominations than a Quarter. Our neighbors across the river are now in the process of eliminating a coin – the penny is being phased out of circulation in Canada, and transactions will hitherto be rounded up or down, as appropriate. In Canada, it costs 1.6 cents to make each penny, so money will be saved.
Here in the US, recent efforts to introduce dollar coins (Susan B. Anthony, Sacajawea) have failed because we did not concomitantly withdraw dollar bills from circulation. The Dollar Coin Alliance argues that doing so would save the government billions. The Government Accountability Office (GAO) concluded,
We estimate that replacing the $1 note with a $1 coin would provide a net benefit to the government of approximately $5.5 billion over 30 years, amounting to an average yearly discounted net benefit of about $184 million. However, this benefit would not be achieved evenly over the 30 years. In fact, as shown in figure 3, the federal government would incur a net loss during the first 4 years. Yearly net benefits begin to accrue in the fifth year of our analysis, and in the tenth year (2020), the initial start-up costs are paid back and overall net benefits begin to accrue.
And that estimate might be low. Consider,
In 1985, for example, the Canadian House of Commons estimated that the conversion to a $1 coin would save the government $175 million (Canadian) in total over 20 years because it would no longer have to regularly replace worn out $1 notes. Canadian officials later determined that the Canadian government saved $450 million (Canadian) between 1987 and 1991.
Dollar bills have a short shelf life – they remain in circulation for about 22 months before they are shredded and recycled or sent to landfills. Coins can be melted down and recycled indefinitely. Dollar coins don’t jam in the vending machine. The GAO has recommended this switch consistently for 22 years, and Washington hasn’t yet gotten with the program.
Eliminating dollar bills and pennies would save billions and reflect economic reality; we don’t have 5-and-dimes anymore.
An extremely simple step that would save the government billions of dollars at no additional cost. The only question is why it hasn’t been done already. Write your Federal Representatives via this link.