3 ms·

I am not getting why they are doing it at all? Why not let existing pennies to exist? They mentioned it costs 1.6c to create 1p coin, but it costs 0.0c to keep

• sdrothrock 13y ago
  It's right in the title: recycling. They get the materials out of pennies that nobody can use anymore.
  • Naga 13y ago
    They are still legal tender actually, and stores still accept them. They are just uncommon now.
• lstamour 13y ago
  Because they can make money off the pennies by recycling them, it costs them the metal worth of the pennies they choose not to recycle. There are also productivity benefits if people don't have to count pennies during transactions. And it's a highly visible action the federal government can take to show it still exists to people who don't read newspapers (like me). I'm sure there are other reasons, but pinning the penny as a "drag on the economy," probably tops the list after the obvious, "I pay taxes to keep the penny in circulation? Why didn't they recycle it?"
• vacri 13y ago
  Small denominations also cost more to handle, for vendors, banks, any one that handles cash, really.
• peeters 13y ago
  Besides the opportunity cost of not reclaiming pennies for recycling, another issue is that pennies, more so than any other denomination, fall out of circulation quickly. That's because people don't tend to keep them in their pocket like most loose change; they end up in a jar somewhere. So by deciding not to mint new coins, you're still signing the penny's death warrant. But you condemn it to a slow, messy death. Stores gradually aren't able to acquire the pennies they need to make change on purchases, as the existing coins fall out of circulation. Eventually the day comes where you need to change the way cash transactions work, because it makes no practical sense to consider the penny a currency. So why delay? Instead, the government flipped the off switch and gave the penny a quick death. Of course, Canadians can still take their pennies to the bank and trade up for a valid denomination.