Monday, March 07, 2011

Switching to a Dollar Coin: Seems Like a No-Brainer

G-8 CountryHighest Widely Circulated CoinU.S. ValueLowest BillU.S. Value
Canada2 Dollar$1.97 5 Dollar$4.92
France2 Euro$2.77 5 Euro$6.92
Germany2 Euro$2.77 5 Euro$6.92
Italy2 Euro$2.77 5 Euro$6.92
Japan500 Yen$6.01 1,000 Yen$12.02
Russia10 Ruble$0.33 50 Ruble$1.67
United Kingdom2 Pound$3.18 5 Pound$7.95
AVERAGE
$2.83
$6.76
United States25 Cents$0.25 1 Dollar$1.00

The chart above is based on data from the Dollar Coin Alliance (DCA), a coalition of small businesses, budget watchdogs, trade associations, and private companies advocating that the U.S. transition to the dollar coin.  The DCA is asking Congress to eliminate the dollar bill in favor of the dollar coin to save billions annually in taxpayer money. According to the DCA:

1. Each year approximately 3.2 billion $1 bills are removed from circulation due to wear and tear. They are not recyclable, so they are shredded and most are deposited in landfills. Dollar coins have a lifespan of 30 years or more, while $1 notes last approximately 2-3 years. A $1 coin that is produced for less than 16¢ would replace 17 bills that would have to be printed for a cost of 47¢.

2. The private sector experiences even greater cost savings and increased revenues from $1 coins. Jammed $1 bills in vending machines cost the industry $1 billion in annual repair costs and lost sales. According to the transit industry, it costs six times more to process $1 bills than $1 coins.

3. Other countries have already recognized the cost savings and benefits of the dollar coin, including Canada, the European Union, and Japan. When Canada transitioned to a dollar coin 25 years ago, the government realized savings more than ten times initial estimates.

4. The United States has one of the smallest denominations of paper currency among the major economies of the world (G-8 Countries). The $1 bill is worth less than any of these other bills except for the Russian Ruble (see chart above).

5. According to a January 2011 poll, Americans favor the transition to a dollar coin by a two-to-one margin once the potential government savings are explained.

9 Comments:

At 3/07/2011 9:09 PM, Blogger Methinks said...

Ugh. But, at the rate at which they're printing money there will be little point in even having denominations as low as $1.

 
At 3/07/2011 10:51 PM, Blogger David Gallion said...

Let me guess. It will be made of copper.... no silver. Look, haven't we all learned the US government is in the business of destroying the value of money, not economizing it.

 
At 3/08/2011 12:46 AM, OpenID fmtrading said...

Don't forget Australia! We have $1 and $2 coins, lowest bill is $5.

 
At 3/08/2011 6:40 AM, Blogger geoih said...

Switching to a dollar coin was the right "business" decision thirty years ago, but it won't happen because it will signify that the dollar has officially become small change.

 
At 3/08/2011 8:50 AM, Blogger Michael Hoff said...

Again... Americans don't want a dollar coin. They've voted. We have the Golden Dollar Coin and the Presidential Dollar Coin in circulation right now. Allegedly. Because no one is using them. Because we don't like them.

Make the dollar bill out of stronger stuff like tyvek. It will last longer and we won't be walking around with four large chunks of pot metal clanking in our pockets.

 
At 3/08/2011 6:29 PM, Blogger Mike said...

I don't think strippers will like it...especially dangerous if rap music moguls are forced to make it hail rather than rain.

 
At 3/09/2011 11:32 AM, OpenID man-with-the-silver-gun said...

Both are available and consumers seem to prefer the bills to the coins by magnitudes. That should tell us something

 
At 3/10/2011 2:11 PM, Blogger $9,000,000,000 Write Off said...

over the past couple of years I've ordered thousands of coin dollars directly from the US Mint. I get points on my credit card and they're fine-to-fun to use. Nieces and nephews enjoy a $25 roll as a present. More meters take them, too.

But most important, if you gamble with friends, there is no better way to pay off a $500 bet than leaving 500 James Buchanan memorial coins spilled out over a desk. If you really hate the guy, you can order sacks of nickels too.

 
At 3/10/2011 9:46 PM, OpenID Sprewell said...

While it sounds like a good idea to save some money, I have to disagree on this one, Mark. You're really just shifting the costs around, making the sort of poor people who routinely handle $1 bills carry the heavier coins, in order to save the govt and businesses some money. I'm fine with subsidizing the poor by printing dollar bills though, as it's a relatively small expense and dollar bills are easier for them to handle. However, talking about coins is really kind of backwards right now, as we're just starting to see wide deployment of wireless payment systems that everyone can use from their cell phone or other mobile device. Practically nobody will be handling cash in a decade or two, most people already pay for most of their purchases with credit/debit cards. I'm on the leading edge here but I have handled almost no cash for 5 years now, making all my purchases online or through cards.

 

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