Goodbye penny, hello $5 coin?ROMA LUCIW
00:00 EDT Thursday, April 10, 2008
Most Canadians have so little use for the penny that the beleaguered coin is now routinely hoarded, lost or just thrown away, according to a report that calls for a radical overhaul of the loose-change jar.
More than a year after it first suggested that the 1-cent coin be scrapped, Desjardins Group says Ottawa should also look at eliminating the nickel, replacing the $5 bill with a coin, adding 20-cent and smaller 50-cent pieces, and eventually consider creating a $200 bill.
"As prices rise in an economy, one of the normal adjustments the government must make is to change the denominations of both coins and banknotes," said Jean-Pierre Aubry, an economic consultant who co-wrote the Desjardins report.
The report, issued yesterday by the Quebec financial services co-operative, says that as prices and standards of living rise, the government should re-examine the usefulness of all of the coins and notes in circulation.
Desjardins suggests Ottawa start by immediately removing the 1-cent coin from circulation. The penny, which it says is increasingly obsolete, has so little purchasing power that people routinely refuse to accept it, throw it out or stockpile it.
The "hoarding phenomenon" is part of the reason Canadian coin production rose sharply in 2006 from 2005, particularly of pennies, which jumped 51 per cent to 1,160 million pieces, the Desjardins report said. That forced the Royal Canadian Mint to make Canadian coins at the expense of producing more lucrative foreign coins.
The group's calculations show that the increased penny production cost Canada at least $150-million in 2006, up from $130-million, when accounting for production, storage, and transportation.
After ditching the penny, Ottawa should retire the 5-cent coin and replace the $5 bill with a coin of the same value, Desjardins said. The next logical step would be to introduce a new series of smaller and lighter low-denomination coins, such as a 20-cent piece, which could replace the quarter, and a new 50-cent piece. A new series of lighter $1, $2 and $5 coins could also be introduced down the road, the report said.
For some Canadians, the penny still holds an intense emotional appeal. That, says Mr. Aubry, is no reason to cling to a coin that buys almost nothing. The emotional debate about whether to eliminate the penny resurfaced two weeks ago when NDP MP Pat Martin introduced a private member's bill calling for its elimination by the start of 2009.
Any decision about whether to change bills or coins rests with Finance Minister Jim Flaherty. Chisholm Pothier, a spokesman for Mr. Flaherty's office, said yesterday that the Mint and the Department of Finance review Canada's coinage system from time to time, and that no changes are planned at this time.
"But the Finance Committee has just announced that they are going to review the coinage system themselves so the Minister is looking forward to reading their report," Mr. Pothier said.
© The Globe and Mail
http://www.globeinvestor.com/servlet/story/GAM.20080410.RCOINS10/GIStory/
