The elimination of the Canadian penny was such a success the country should look at eliminating the nickel next, and replacing the $5 bill with a coin, says one of the country’s largest financial institutions.
In a client note this week, Desjardins Group noted it’s been one year since the Royal Canadian Mint began phasing out the penny, and the little rust-coloured coin disappeared “peacefully, quickly and noiselessly.
“We’ve gotten rid of something that was both useless and costly,” the note says, noting the $150-million annual cost of keeping the penny in circulation.
The next step, Desjardins argues, should be to eliminate the nickel and to shrink the remaining coins, reducing the cost of producing them, as New Zealand has done. And the “second phase” of this would be to turn the $5 bill into a coin.
“The goal is to reduce the total number and weight of the coins that people handle and carry,” the client note says.
Jean-Pierre Aubrey, a veteran of the Bank of Canada, argued in papers and presentations for Desjardins last year that Canada should have eliminated the penny in 1982, as that was when it stopped making economic sense to produce the coin.
“This would have kept the Mint from producing some 20 billion pennies, and avoided the handling of hundreds of billions of coins in Canada,” Desjardins says.
The federal government has studied the option of switching to a five-dollar coin before. The Bank of Canada estimated in 2007 that Canada should make the switch no later than 2021.
A spokesperson for the Bank of Canada told the Wall Street Journal the bank has no plans at present to eliminate the nickel.