Sunday, April 1, 2012

Canada Cancels Penny

It was one of the least controversial changes in the new Canadian budget: Canada will stop minting pennies. The one-cent coin will remain in circulation, but the government will save $11 million a year by no longer minting replacement pennies. Cash point-of-sale transactions will be rounded off to the nearest nickel, but electronic transactions will still be counted in cents.

It is part of the cycle of inflation that the least valuable forms of currency eventually have to be dropped, and higher-value pieces added, as the value of money declines over time. You can’t really buy anything for a dime, so a penny has become conspicuously heavy and cumbersome for something so ephemeral.

The United States too has for many years considering discontinuing its penny, which has the same monetary value as the Canadian penny, but the last time Congress looked at the question, it concluded that that time had not yet come. Currency is a more loaded political issue in the United States, and Congress is probably prudent in waiting until people have lost interest in pennies before taking the inevitable step of discontinuing them.