Killing the penny in Canada (continued)

Soon to be extinct: the Canadian penny. Photo: amy-wong.com, CC some rights reserved

Pennies don’t seem that important in the greater scheme of things. But they’ve been around for so long that the penny’s impending demise is still newsworthy here in Canada.

It’s been nearly a year since word came that the Canadian government no longer saw much sense in paying 1.6 cents to mint each penny. What amounted to advance notice in 2012 is now hitting the implementation stage. After Feb 4th, pennies will no longer be distributed in Canada though the mint or by way of banks.

It’s been calculated that dropping the penny will save $11 million per year in production costs. But the Financial Post says, that savings drops to $4 million (over a 6-year redemption period) after costs of removing the penny from circulation are taken into account.

For the very curious, some of those costs include:

…$53 million expected to be paid out to redeem the face value of the coins, as well as another $27 million in handling and administration costs by the Royal Canadian Mint.

Recycling the zinc and copper from melted-down pennies will bring in about $42.5 million in revenue

At least one recent poll says most Canadians are OK with dropping their only copper coin. 60% say that’s as far as this needs to go, though, the nickel should stay.

Values can still be calculated down to the penny. Checks, credit cards and electronic transactions can still operate down to the penny. But cash transactions using the penny coin will be phased out, at the discretion of individual businesses.

In general, retail merchants are being encouraged to drop the penny and round sales to the nearest nickel. But there is no time limit on the use or value of existing pennies.

I sort of thought rounding was a well-understood concept, but it gets a thorough explanation (with graphics) at the Royal Canadian Mint web page on this subject. That and more is also covered on this Department of Finance Canada webpage.

Most pennies are worth about a a nickel for five, but the very rarest ones are worth a small fortune. As Canadians donate unwanted pennies to charity, or redeem them at banks, here’s a photo gallery of the ones worth watching for, such as the 1936 ‘dot’ SP-66 penny, valued at approximately $400,000.

According to this article in the Calgary Herald, Canada Post will still print and use the penny stamp.

Currency transition takes time. The “Ask McArdle” column at Canadian Business, was quized on how long would it take for the penny coin to disappear? The author answered by way of example:

Bank of Canada discontinued the two-dollar bill in 1996. A decade later, there were still more than 109 million of them still stuffed in the night tables, piggy banks and bustiers of the nation.

Of course most of those $2 bills are squirrelled away as souvenirs. And the $1 and $2 coins that replaced those paper denominations went on to be extremely popular.

If you were in charge of U.S. currency, would you drop any coins or bills? Should something be added?

Bonus Q: whose face would you put on any new currency?