The Canadian penny is heading into retirement. As of today, the Canadian Mint will stop distributing the coins to financial institutions.
“Pennies have sat idle for too long in forgotten penny jars and couch crevices,” Shelly Glover, Parliamentary secretary to the Canadian Minister of Finance, said in a statement.
They've also been costing too much to make: 1.6 cents per coin. The government estimates the savings from ending the penny will be $11 million a year. The phase-out was announced last year as part of Canada's Economic Action Plan 2012, and the last one was minted in May. Today, it costs 20 pennies to buy what one cent bought in 1914, according to the Bank of Canada's inflation calculator.
Businesses can continue to accept pennies, which will retain their value indefinitely. (And with about six billion pennies in circulation, they won't disappear anytime soon.) But companies are expected to start rounding amounts for cash purchases.
The Canadian move has prompted some to ask: Is the U.S. penny next? The cost to make a U.S. penny was 2 cents in the fiscal year ending Sept. 30, 2012, according to Coin Update. But as Bloomberg Businessweek reported last March, don't bank on a change anytime soon. There are objections to possible rounding costs and concern about putting more reliance on the nickel, which cost 10.18 cents to produce. And then there's the sentimental argument -- not to kill off the Abraham Lincoln coin.
For U.S. retailers, it looks as if the question is slowly becoming somewhat less relevant anyway. Barron's reported in December that cash accounted for an estimated 29 percent of U.S. retail payments in 2012, compared with 36 percent a decade before. From 2006 to 2009, the number of noncash payments in the U.S. increased 4.6 percent per year, according to a 2010 Federal Reserve study.
What do you think? Should the U.S. get rid of the penny?
(Kirsten Salyer is the social media editor for Bloomberg View. Follow her on Twitter.)