In an unprecedented and historical activity, the U.S. Department of the Treasury has declared that the production of pennies will cease, making it the close of an era for one of the nation’s most ancient coins. As the country takes a step further in a more technological world, the future of the penny is being discussed. So the question arises, are pennies really going away?
The Amount of Money Needed to Save One Cent Coin
The U.S. Mint, the authority in charge of the production of coins, has always had the issue of the cost of the penny production being exceeded by the value of the coin. It is no secret for anyone that the production expenses of each penny almost reach the point where the coin costs the population 2.5 cents which in fact is a financial burden. The decision to cease its production is anticipated to have a big impact on the government’s annual savings. According to experts, the increasing cost of producing the copper-zinc one cent coins makes them economically unviable today.
Expected to save around $56 million annually, the discontinuance of the penny is the focus of the debate whether the coin should be completely removed or a continued small number should be delivered after a long time of the discussion. The design of the penny, which has undergone various modifications since its first issue in 1793, will not be affected by this decision and it will continue to be legal tender, yet, it will vanish from now on. This step has caused many to wonder about the usefulness of keeping the coin that was once a critical part of the monetary system.
Will the Penny’s Departure Be Noted?
The penny has now a place in the hearts of most Americans, as it has become a symbol of the past, something they can’t let go of, and sheer convenience, even though the real value of the penny has been so low that it hardly counts for anything today. Traditionally, one cent coins had very high purchasing power and thus were much sought after in carrying out the daily transactions. However, with the growth of the economy most people find themselves in the situation of gathering money in the form of lidded jars simply because coins sit idle for most of the time.
Some critics of the action are of the view that the discontinuation of the penny may result in greater economic instability for consumers, especially the less privileged who are still fully engaged in cash-based transactions. The idea that the elimination of the penny is inevitable in a digital payment-oriented world, where the number of cash payments is strongly decreasing, calls into doubt the future role of the penny and whether it is still a needed currency in the modern economy. Each of the penny’s removal opponents seems to have a notion that the demise of the penny could somehow give birth to other lower-value coins, for example, the nickel, leading to a further increase in complexity related to money transactions.
The New Economy: Digital and Cash-Free?
Not only is the United States ready for a more digital economy, with the majority of payments being carried out via mobile gadgets and contactless credit cards, but also the low-value physical coins are still being used. It has been informed that the number of transactions that were paid with cash reached less than 10% out of the total number of transactions in America, and now things are going from bad to worse. Time-wise, this has been presented as one of the main drivers that the Mint has been referring to while it was making the decision to phase out the penny.
For your information, a number of sectors are onboard with the system of rounding out payment amounts, especially in Europe, where cash transactions are usually rounded to the five or ten cents. Quite a few pilot round-money-to-five or -ten-cents-acts already exist in America that are responsible for rounding transactions to the nearest nickel. It is one of the arguments that the dollar currency the system is rolled out to bring about the rounding of cash payments to the nearest nickel, which in turn should simplify transactions and thus make it fewer pennies.
Economic Implications and Public Reaction
While some people might underestimate the direct impact of the penny’s removal, it definitely has the potential for a wide-ranging influence. According to the trend in the Mint’s decision, it is likely that there will be an economic ripple effect, with retail and banking industries topping the list. The change would trigger readjustments in the habits and settings of both the customers and the businesses. The concomitant short-term confusion will likely give way to long-term economic benefits to the country, experts claim.
Interestingly, the studies suggest that the majority of the USA’s population doesn’t care about the penny going away, while some even went so far as to say that they are surprised that it was still in use, to begin with. At the same time, there are other people, mostly older ones, who have a different feeling about the penny and are still attached to it culturally and have a hard time letting it go.
What is the Future of the U.S. Money?
Even though the penny will no longer be available, professionals still assert that the American currency will still be around for a long time. On the other hand, it is under renewal. In the expected event that the majority of the population changes their payment methods to digital ones, coins may become extinct in the future. As noted by experts, the United States might completely change the medium of exchange and start to use new types of money, for example, central bank digital currency.
Even if, after a certain time, the penny becomes history, it will still remain an essential part of the American culture as well as new coin types to take its place. The question is, what will be the people’s reaction to such a world without this costly, yet unique icon of their national currency?
