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A penny for your thought? Not in Canada

4/3/2012

Canada will be done with the penny by year's end.

The Canadian penny will be withdrawn from circulation by years’ end.  Apparently it costs 1.6 Canadian cents to produce each one cent coin and stamping out the penny will save around C$11 million a year.

In a recent budget document, the government stated that “some Canadians consider the penny more of a nuisance than a useful coin.  We often store them in jars, throw them away in water fountains or refuse them as change.”   The document went on to state, “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.”

Canada will join the growing list of other nations that have already stopped producing or eliminated low denomination coins altogether.  These nations include Australia, Brazil, Finland, Israel, the Netherlands, New Zealand, Norway, Sweden, Switzerland and Britain.

The Royal Canadian Mint will stop distributing penny coins to financial institutions later this year.  As the coin slowly disappears, prices for cash transactions will be rounded up or down to the closest five cents.  Canadians will simply be asked to round prices up or down to the nearest nickel.  Credit card users, however, will still be required to pay to the cent.

This pest of a coin has been around for 104 years and was originally made of copper.  In 1997, the mint changed to a zinc core with a thin plating of copper to save money.  In 2000, the recipe was changed once again to a steel core.  If the Mint had not made the switch, high copper prices and metal thieves may have ended the penny’s reign long before Jim Flaherty had a chance.

Stay tuned for the demise of the nickel…