Canada Kills Its Penny; Can We Please Be Next?

(Photo: mrgreen09)

If you’ve been reading this blog for a while, you may know that I am devoutly anti-penny. This includes a rant on 60 Minutes in which I argue that the penny should be killed off, as inflation has rendered it worse than worthless. 

The U.S. government remains unpersuaded, but our good neighbors to the north are about to take the leap (following the lead, it should be said, of several other countries).

Here are details from Canada’s Budget 2012 and here’s a CBC report:

In part because of rising prices for the metals it’s made of, it actually costs 1.6 cents to produce every penny. The government estimates it loses $11 million a year producing and distributing the penny, and that doesn’t include the costs and frustrations for businesses and consumers that use them in transactions.

A 2008 report by Quebec-based bank Desjardins estimated the penny’s existence cost Canada’s economy about $150 million in 2006. Canada’s big banks alone handle more than nine billion pennies a year, which costs them $20 million annually to process. …

A 2005 study by the Bank of Canada concluded that doing away with the penny wouldn’t lead to any inflation. And Ottawa says similar systems implemented in Norway, Australia, New Zealand and elsewhere didn’t lead to systemic price increases.

(HT: Adam Scott, Tyler Griffin)