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- Bratvegas
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Alternative Title: Penny For Your Thoughts
Whether it is one cent in the Eurozone and United States, or one pence in the Sterling Zone, the penny is a feature of most if not all major currencies.
But should the penny be stopped? There are arguments in many nations about withdrawing the smallest subunit, as well as arguments to retain it.
Elimination
Cost - Most countries' production costs of one penny is in fact more than one penny. In the United States it costs about 2c to manufacture a penny, and about 1.7p to manufacture one in the United Kingdom. A large amount of pennies are currently produced from cupronickel (copper-plated nickel) and this is now a costly procedure. The United States currently uses copper-plated zinc.
It should also be noted that most copper coins were made of 90% copper minimum up until the 1980s and 1990s, and this was stopped because manufacturing in pure or near pure copper made unit costs exceed the face value of the penny. Some countries such as the United Kingdom have looked at alternatives to this and looked for even cheaper alloys, and have manufactured pennies out of copper-plated steel since 2010.
Inflation - Because of inflation, the purchasing power of a penny has crashed over the last 40 years. Therefore, it has been suggested that the limited usage and practicality of the penny warrants its elimination.
Prior to decimalisation, the British farthing was the smallest denomination in the sterling zone, being worth 1/4 of a penny. By the 1950s it itself had become near worthless and was withdrawn in the 1960s, before the Pound actually went decimal. The British penny is nominally worth 9.6 times more than the farthing, but in reality because of inflation its purchasing power is actually less than half of a farthing.
Under British law, copper coins can only be legally used for debts and purchases of up to 20p and are almost never used in bulk and seldom accepted when they are.
Pollution - Because of its limited use and lack of real purchasing power, many pennies are discarded. Many end up in landfills and due to the use of metals like nickel and zinc, inadvertently contribute to air pollution.
Preservation
Consumers and price increases - It is argued by some that elimination of pennies would result in many shops rounding up their prices, hitting consumers in their pockets.
Inflation - While inflation has rendered the penny a seemingly worthless denomination, the penny itself is used to combat inflation, and keep prices down. Indeed, following decimalisation the United Kingdom minted a decimal halfpenny to keep inflation down, but the coin was withdrawn and demonitised in 1984 due to its unpopularity.
Eliminating the penny at all could result in an increase in inflation.
Charities - Despite the lack of purchasing power, charities argue that the penny is a vital source of income for them, and that eliminating lower subunits would be a major loss of income for them.
Current Status & Precedents
Australia withdrew its one and two cent coins in the early 1990s.
Canada stopped minting pennies in 2012 and is in the process of withdrawing all old pennies.
Finland & the Netherlands no longer issue their own version of the 1 and 2 Eurozone cent.
New Zealand has withdrawn its 1, 2 and 5 cent coins.
Russia stopped issuing 1 kopek coins in 2010. Its 2, 5 and 10 kopek coins are worth US$0.002, $0.003 and US$0.02
By 2010, over a process of 40 yeas Sweden has eliminated its 1, 2, 5, 10, 25 and 50 oere and now has no subunit of its Krone.
While the United States retains its one cent, prices at its overseas military bases are rounded to the nearest nickel.
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Personally, I like pennies and am in favour of retaining them. However I do seem to have written plenty more on eliminating pennies than preserving them. I agree that charities are very grateful for one and two pence/cent coins and withdrawal might be a negative blow for charities.
Whether it is one cent in the Eurozone and United States, or one pence in the Sterling Zone, the penny is a feature of most if not all major currencies.
But should the penny be stopped? There are arguments in many nations about withdrawing the smallest subunit, as well as arguments to retain it.
Elimination
Cost - Most countries' production costs of one penny is in fact more than one penny. In the United States it costs about 2c to manufacture a penny, and about 1.7p to manufacture one in the United Kingdom. A large amount of pennies are currently produced from cupronickel (copper-plated nickel) and this is now a costly procedure. The United States currently uses copper-plated zinc.
It should also be noted that most copper coins were made of 90% copper minimum up until the 1980s and 1990s, and this was stopped because manufacturing in pure or near pure copper made unit costs exceed the face value of the penny. Some countries such as the United Kingdom have looked at alternatives to this and looked for even cheaper alloys, and have manufactured pennies out of copper-plated steel since 2010.
Inflation - Because of inflation, the purchasing power of a penny has crashed over the last 40 years. Therefore, it has been suggested that the limited usage and practicality of the penny warrants its elimination.
Prior to decimalisation, the British farthing was the smallest denomination in the sterling zone, being worth 1/4 of a penny. By the 1950s it itself had become near worthless and was withdrawn in the 1960s, before the Pound actually went decimal. The British penny is nominally worth 9.6 times more than the farthing, but in reality because of inflation its purchasing power is actually less than half of a farthing.
Under British law, copper coins can only be legally used for debts and purchases of up to 20p and are almost never used in bulk and seldom accepted when they are.
Pollution - Because of its limited use and lack of real purchasing power, many pennies are discarded. Many end up in landfills and due to the use of metals like nickel and zinc, inadvertently contribute to air pollution.
Preservation
Consumers and price increases - It is argued by some that elimination of pennies would result in many shops rounding up their prices, hitting consumers in their pockets.
Inflation - While inflation has rendered the penny a seemingly worthless denomination, the penny itself is used to combat inflation, and keep prices down. Indeed, following decimalisation the United Kingdom minted a decimal halfpenny to keep inflation down, but the coin was withdrawn and demonitised in 1984 due to its unpopularity.
Eliminating the penny at all could result in an increase in inflation.
Charities - Despite the lack of purchasing power, charities argue that the penny is a vital source of income for them, and that eliminating lower subunits would be a major loss of income for them.
Current Status & Precedents
Australia withdrew its one and two cent coins in the early 1990s.
Canada stopped minting pennies in 2012 and is in the process of withdrawing all old pennies.
Finland & the Netherlands no longer issue their own version of the 1 and 2 Eurozone cent.
New Zealand has withdrawn its 1, 2 and 5 cent coins.
Russia stopped issuing 1 kopek coins in 2010. Its 2, 5 and 10 kopek coins are worth US$0.002, $0.003 and US$0.02
By 2010, over a process of 40 yeas Sweden has eliminated its 1, 2, 5, 10, 25 and 50 oere and now has no subunit of its Krone.
While the United States retains its one cent, prices at its overseas military bases are rounded to the nearest nickel.
---
Personally, I like pennies and am in favour of retaining them. However I do seem to have written plenty more on eliminating pennies than preserving them. I agree that charities are very grateful for one and two pence/cent coins and withdrawal might be a negative blow for charities.
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), though I think that it would make sense to lower its cost of manuafacturing by reducing the amount of nickel in the nickel.
I have a coin sorter at home and they go in there at the end of every day. I just don't think of anything smaller than 10p these days. Therefore, I vote 'get rid'.
