“The purpose of the monetary system is to facilitate exchange, but… the penny no longer serves that purpose.” Economist Greg Mankiw
There used to be a coin in North America called the half-penny, but that was eliminated in 1857 leaving the penny as the lowest denomination. Due to inflation however, the half-penny back then had more buying power than a dime today.
It costs the gov’t an estimated 1.5 (Canada) to 1.7 (US) cents to make a cent. And with the rising costs of raw materials (zinc), labor, and transportation pretty soon it’s going to cost us (tax payers) twice as much to make the penny as its face value is worth. It’s a bit paradoxical that you can literally melt pennies and sell the blob of metal for a profit (although this is illegal for obvious reasons.)
It’s quite common to eliminated the lowest denominated coin over time. Here are what other countries have done over the years;
Swedan stopped minting their 1 and 2 ore coins in 1972.
Brazil, retired their 1 cent coins in 2006.
Australia, 1 and 2 cent coins in 1992.
New Zealand 1 and 2 coins in 1990. Then eliminated their 5 cent coins in 2005.
The Netherlands, 1 cent coins in 1980.
Is it time we retired the penny or should we keep it circulating?