OTTAWA (Reuters) - Canada’s puny penny coin, loved by some but an annoyance to many, will be withdrawn from circulation this year because it costs too much to make and is a pecuniary pest, the government announced on Thursday.
“The penny is a currency without any currency in Canada,” Finance Minister Jim Flaherty told reporters.
Ottawa said the penny retained only one twentieth of its original purchasing power. It costs 1.6 Canadian cents to produce each one cent coin and stamping out the penny will save around C$11 million ($11 million) a year.
“Some Canadians consider the penny more of a nuisance than a useful coin. We often store them in jars, throw them away in water fountains or refuse them as change,” the government said in a budget document.
“Financial institutions face increasing costs for handling, storing and transporting pennies. Over time, the penny’s burden to the economy has grown relative to its value as a means of payment,” it said.
Other nations that have either ceased to produce or have removed low denomination coins include Australia, Brazil, Finland, Israel, the Netherlands, New Zealand, Norway, Sweden, Switzerland and Britain.
“There are 30 billion pennies in circulation and every year they are minting more. It was just one of those no-brainer slam dunks. It’s a place where we can save money,” said opposition legislator Pat Martin, who has long campaigned for the penny to be abolished.
“Of the 30 billion pennies, I think half of them are under my bed in a big jar,” he told the Canadian Broadcasting Corp.
The Royal Canadian Mint will stop distributing penny coins to financial institutions later this year. As the coin slowly disappears, prices for cash transactions will be rounded up or down to the closest five cents.
Non-cash payments such as checks, credit and debit cards will continue to be settled to the cent.
($1 = $1 Canadian)
Editing by Jeffrey Hodgson and Randall Palmer