As the penny falls in Canada, what is its place globally?
By Azim Ahmed, staff writer
Last month, Canadians bade farewell to the penny, a coin that has pre-dated every living Canadian. Reactions mostly bordered on ‘good riddance’. For many, when the Royal Canadian Mint stopped distributing the copper-coloured coin on Feb. 4, it was akin to getting rid of those annoying flees that intrude into homes.
This is with good reason, of course. In its final year, the cost of producing one penny was 1.6 cents. Adjusted for inflation, an 1870 penny would be worth 31 cents today. Abolishing the penny is expected to save $11 million per year now.
But what of the penny’s international cousins? Australia, New Zealand, and Ireland dropped them out of their rotation in 1964, 1989 and 2000, respectively, and have not seemed to miss them. Meanwhile, the British penny, which dates back to the seventh century, continues to roll them out with no apparent signs of slowing down. The American penny, in operation since 1793, has also out-lived its Canadian counterpart, but not without some internal debate.
… the exceedingly declining purchasing power of the penny is why it’s leaving our lives, and will be sure to inevitably follow suit in the U.S and Britain.
According to the Economist, U.S. President Barack Obama says the penny is no longer the change he believes in.
“One of the things you see chronically in government is it’s very hard to get rid of things that don’t work so that we can then invest in the things that do,” said the president at a forum in February. “The penny, I think, ends up being a good metaphor for some of the larger problems we’ve got.”
The U.S. government spent $116 million last year producing pennies, which have cost more than a cent to produce since 2006. This can be attributed to an increase in the price of zinc, which is made to produce the coin.
However, the coinage system has not seen drastic change in the U.S. for a very long period. In fact, its last makeover was back in 1857, when the James Buchanan administration nixed the half-cent coin.
Ultimately, the exceedingly declining purchasing power of the penny is why it’s leaving our lives, and will be sure to inevitably follow suit in the U.S and Britain. Vending machines and parking metres have not accepted them for decades, as their presence ends up actually slowing down commerce, rather than moving it along.
Japan and South Korea have instituted an ‘e-wallet’ system where small purchases can be done through a smart phone, with Canadian banks set to introduce a similar system within two years. Debit and credit card usages are becoming increasingly more common, and the thought of simply waving phones over a small sensor or through an app to purchase a cup of coffee will certainly be appealing to many (though definitely not all) Canadians.
While we mourn the penny, there is already talk for the next smallest coin in becoming the next to fall. NDP MP Part Martin has announced he will introduce a private member’s bill to eliminate the nickel, which costs about ten cents to make.
One has to wonder, will endearing pop-culture terms such “a penny for your thoughts”, or “here’s my two cents” soon follow suit?
Azim Ahmed is a public relations professional with over five years of experience as a journalist. Azim has a special interest in writing on the business of sports and on Canada’s role in a global economy.