Tuesday, December 14, 2010
Canadian Penny to Die?
The Bank of Canada says the copper-plated coin has lost 95 per cent of its purchasing power since 1908, when it was first produced in Canada.
It now costs more to produce the penny — about 1.5 cents each — than the coin’s actual face value.
The Royal Canadian Mint has been forced to sharply increase production of the penny in recent years as more and more Canadians hoard, rather than use the copper.
Finance Minister Jim Flaherty has mused in the past about doing away with the penny and his department has reportedly been studying the penny-free economies in Australia and New Zealand.
The Bank of Canada has also studied the potential inflationary impact of eliminating the penny and has concluded it would be negligible.
“On some transactions, the merchant loses and the consumer wins; on some, the merchant wins and the consumer loses,” Pierre Duguay, the bank’s deputy governor, told the Senate finance committee last spring.
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