It’s sounding like we won’t have much of a mourning period for the penny. It’s not even officially departed and there are already calls for the demise of the nickel.
Had it been April 1 rather than the start of the year, Canadians might well have passed this news item off as an April Fool’s gag. But former Bank of Canada economist Jean-Pierre Aubry said it’s time to ditch the five-cent piece. He maintains the penny should have been killed off in 1982.
Penny-value items have disappeared, and a shopper would look long to find five-cent buys these days – making the coins appear of questionable worth.
Considering there was a certain amount of resistance to the idea of the penny’s retirement, though, let’s brace ourselves for the next round.
Or should we face reality and acknowledge that people are paying for items a lot differently than 20, 30 or 40 years ago?
More and more people are using debit cards for purchases. Additionally, those who do prefer dealing in cash apparently don’t tend to use a lot of nickels. The low-value coin tends to get saved in jars, rather than kept in circulation through regular purchases. Thus, for stores to be able to hand out change, they continually have to obtain rolls of nickels from banks.
Fortunately, there are models for such coin-eliminating trends. New Zealand, already having forsaken the penny, got rid of its five-cent piece in 2006 and Australia is considering following suit.
The biggest fear from consumers is that there would be more rounding up of prices than rounding down. Aubrey and others say studies of these other trail-blazing countries show discarding the coins had no effect on inflation and didn’t push prices upward.
The simple fact that the cost of producing these coins is higher than the face value – the nickel is close to that point now – underlines their redundancy. If economists in this country can demonstrate that it won’t affect costs, the only thing standing in the way would be people getting used to it.