Goodbye, Penny: Treasury Unveils Plan to Eliminate It

The US Treasury has announced its plan to phase out the production of pennies, with the United States Mint continuing to manufacture pennies only as long as an inventory of penny blanks exists. Consumers will still be able to use their existing pennies for purchases, but businesses that complete cash transactions will have to start rounding up or down to the nearest nickel.

The decision is not a surprise, given that the production of a penny costs more than its value. President Donald Trump had previously called for an end to the production of pennies, citing the cost.

“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies. Let’s rip the waste out of our great nation's budget, even if it's a penny at a time.”

Trump actually underestimated the true cost of producing a penny, which is more than three cents.

The Mint also loses money on each nickel it produces, with production costs and administrative and distribution costs amounting to 11 cents and 2.8 cents respectively.

Many have long advocated for eliminating the penny due to its low value and high production cost.

“When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful.”

The decision has drawn support from some merchants, who see it as a way to speed up transaction times. The National Association of Convenience Stores has agreed with the idea in principle.

The US would not be the first country to eliminate its least valuable coin, as Canada stopped minting pennies in 2012 and using them entirely in 2013.

One reason for the high production volume of pennies is that a large percentage do not remain in circulation. Many are stashed away or lost.