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WILL CANADA ELIMINATE NICKEL NEXT?
Is the beaver next in Canada's crosshairs for coin elimination? P.K. Saha and Dick Johnson forwarded this article about speculation that the five cent coin will be the next to go.
-Editor
Dick Johnson writes: Flushed with the apparent success of eliminating their cent coin, Canadians are now considering dispensing with the nickel as well A retired Bank of Canada economist Jean-Pierre Aubry, says the nickel is also becoming obsolete. His analysis over the years reveal the cent reached a tipping-point for being dumped back in 1982. He states the nickel is reaching that same tipping-point now., Interestingly, he notes, when a low value coin is required to be struck in ever larger quantities each year it means the coins are being hoarded and not being returned to circulation. That is now occurring in Canada for the nickel. It wasn't mentioned in an article this week, but with both the cent and nickel eliminated it will making rounding off easer to the nearest 10-cent multiple
As the penny is set to begin retirement next month, there are already calls to put the nickel out to pasture as well. The Royal Canadian Mint starts collecting one-cent coins on Feb. 4 for melting and recycling of the metal content, with some six billion pennies expected to be surrendered by Canadians over the next six years. Finance Minister Jim Flaherty announced the surprise demise in last year's budget, saying the penny had become a nuisance. And a former Bank of Canada economist says the nickel is also becoming obsolete, and should be next in line for retirement. "We see less and less people now ... digging in their wallets for nickels," Jean-Pierre Aubry said in an interview. A retired 30-year veteran of the Bank of Canada, Aubry has been a leading proponent of withdrawing the one-cent piece from circulation. In papers and presentations for Desjardins Group over the last few years, Aubry used economic models to show that the penny should actually have been killed in about 1982. That was a tipping point, as more Canadians hoarded the coins and the Royal Canadian Mint was pressed to churn out billions more to keep retailers stocked, costing the government up to $11 million annually. The last pennies minted on May 4 in Winnipeg were costing about 1.6 cents each to manufacture. Aubry also estimates retailers, banks and consumers have absorbed about $140 million in handling costs each year, creating an unnecessary drag on the economy. Even though Finance Canada faces a one-time net cost of $38 million to retire the penny, the long-term savings to government and to the economy will be substantial. Aubry argues the nickel will soon hit the same tipping point the penny did in 1982, as Canadians hoard them in greater numbers, forcing the mint to distribute up to 350 million each year to meet retail demand. "It's a sign that the coin is not well used," he said.
To read the complete article, see:
Will nickel follow penny out of Canadian coin circulation?
(www.cbc.ca/news/business/story/2013/01/02/can-money-nickel-penny-coin.html)
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