BANK OFFICIAL: ENGLAND SHOULD ABOLISH PENNY

He was Governor of the Bank of Canada who oversaw the abolishment of the cent coin in Canada in 2013. Now he is with the Bank of England and is recommending Great Britain abolish the one penny coin. Mark Carney -- his friends call him "Carnage" -- made news last week with his statement "it makes sense to eliminate the coin."

However, he stated that it is not the Bank of England that makes the decision to pull the plug, that decision must be made by the Royal Mint. There are 11.3 billion pennies currently in circulation and the Royal Mint strikes millions more each year, 496 million in 2015-2016.

The one pence denomination is more than a century old, it first appeared in the reign of King Offa in 785. With the 1971 decimalization in England the penny was continued but reduced in size. A halfpence was dropped from circulation in 1984.

Mark Carney admitted the penny is effectively worthless. In addition to Canada he noted that Australia and New Zealand have abolished their cent, the lowest coin intended o circulate. He didn't mention it but in all, more than 20 countries have eliminated their lowest value coin and Australia is now considering abolishing their 5-cent coin.

His stated reasoning is economic. "I made the point that we keep inflation low, stable, predictable. But actually what that means, what parliament tells us to do, is to make sure it averages 2% a year."

He stated in terms all could understand: "The cost of a chocolate bar should go up 2% a year and ideally wages should go up more than that so people are getting ahead."

"But the point was that over time that means the real value of the penny, and what it can buy goes down, and so at some point it does make sense to get rid of it."

End of news story, and now for my comments. I have written extensively about this subject for years. Mr. Carney's statements of why a country should ax its lowest value coin is the best I have read. In country after country citizens have rejected accepting low value coins in change. They will not even bend over to pick up one on the ground.

The fact that 23 countries around the world have ceased striking and abolished their lowest value coin has not influenced American officials. United States, as a financial leader, should have done so years ago.

Yet Congress and the Treasury Department have rejected any suggestion to eliminate the cent – even though for the past five years it costs more than a cent to manufacture a cent! The cost 2.4 cents in 2011 and has dropped slight since. Notably despite several consultant studies the conclusion was there is no feasible metal composition in which to make cent coins.

Mr. Carney noted that once the penny is withdrawn, citizens can donate their coins on hand to charities. That is fine but ultimately something must be done with the physical metal when all the coins are turned over to be melted.

In articles in The Wall Street Journal and elsewhere I have suggested two solutions: reformulate U.S. cent metal to (1) strike higher denomination coins, or, (2) use the metal for statues or carrion bells for municipalities who desire to have these.

This requires, however, revamping our entire coinage structure. I suggest abolishing three denominations, and adding three new denominations for circulation.

Eliminate the cent, nickel and quarter, continue striking the dime, half dollar. and dollar coins and add new denominations of $5, $10 and $20 for circulation.

The coin machine industry – one of the largest users of coins – would endorse the increased use of coins to eliminate the systemic problems of machine acceptance of paper money.

This new coinage array will inevitably become standard in America, I predict, by 2030.

The Treasury should take action in this direction, the sooner the better. It solves many problems at the present – i.e. cost of cent coin composition – and prevents similar problems in the future.

Here's another from Metro: (metro.co.uk/2016/09/17/its-the-end-of-an-era-as-we-might-get-rid-of-the-1p-coin-6133952/)