Canada Kills the Penny

Thursday, 29 March 2012 | by Pat's Picks

Starting this fall, the penny will vanish from Canada. This afternoon, as part of the federal budget announcement, the finance minister unveiled a plan to phase out the one-cent coin in the fall.

The intent is for electronic transactions to still be recorded in one-cent increments, but cash transactions will be rounded up, or down, to the nearest nickel.  Canada isn’t breaking ground here:  Australia phased out its pennies in 1992 and similar changes happen regularly in countries with high inflation.  But this is an idea whose time has come.  It was costing 1.5 cents to manufacture every penny.

Finance minister Jim Flaherty had a clever line in making the announcement: “The penny is a currency without any currency.”

Nobody needs a pocket full of pennies.  I didn’t really consider this a pressing issue, but now that Government of Canada has provided a case study for the US government it’s time for Washington to consider the same move.  No sense rushing into it—but US officials should watch the Canadian transition, learn from any mistakes and follow a similar path themselves.