Bahamas Cent to be Eliminated by Joshua McMorrow-Hernandez for CoinWeek …..
While the United States continues pumping out billions of one-cent coins, the Bahamas will become the next country to eliminate its one-cent coin. The island nation, sitting less than 100 miles east of West Palm Beach, Florida, will officially demonetize and withdraw its one-cent coins beginning in 2020 following a recent study conducted by the Central Bank of the Bahamas and Secura Monde International that suggests the lowly denomination has outlived its usefulness in the island nation.
According to the Central Bank study, only 52% of the Bahamian population regularly uses one-cent coins for making payments. Some 78% of consumers never or rarely return their accumulated one-cent coins to a bank or post office, and just 39% of retailers and banks regularly received one-cent coins during the course of business. Interestingly, 61% of businesses estimated the cost of handling one-cent coins was equal to or higher than the face value of the coin.
Meanwhile, the Bahamas one-cent coin has seen its purchasing power diminish by 90% since first being issued in 1966, yet it now costs 1.04 cents – more than the coin’s face value – to produce and distribute.
With these findings from the study, the Central Bank concludes now is the time to end production of the one-cent coin, and it will subsequently issue its last cent on January 31, 2020. One-cent coins will be permitted for use as a medium of exchange in the Bahamas until December 30, 2020, the last day before the denomination’s demonetization on December 31, 2020, and will be accepted for redemption at the Bank’s partner locations through June 30, 2021.
Low-Denomination Coins: An Endangered Numismatic Species
Of course, such a swift end for the Bahamas one-cent coin may seem shocking to those of us living in the United States, a country that has debated the fate of its own one-cent coins since at least the 1980s.
The U.S. is among a shrinking number of nations still issuing one-cent pieces or their economic equivalents. In the last couple of decades, a multitude of nations have eliminated low-denomination coinage, including Australia, Brazil, Canada, Denmark, Ireland, Norway, Sweden, South Africa, and Trinidad and Tobago. And Japan appears to be doing so, as well.
Certainly, abolishing low-denomination coinage isn’t a simple task. There are potential economic consequences to withdrawing a denomination, such as the United States one-cent coin, from circulation.
In all cases, the most immediate impact felt by consumers is the rounding of totals for cash transactions up or down to the next nearest denomination increment. For consumers in the Bahamas, they will be rounding up or down to the nearest five-cent increment. This is already the case in Canada, which issued its last circulating one-cent coin in 2012. When Australia withdrew its one-cent and two-cent coins in 1992, the five-cent coin became its lowest denomination and thus likewise the basis for rounding cash transactions there.
In virtually all cases, there is a net economic benefit to be had by removing low-denomination coinage from circulation: governments save money with the elimination of coins that generally cost more to produce than their face value, and retail businesses often engage in more competitive pricing practices that essentially negate the inflationary ramifications of losing a low-value denomination.
So, with more and more nations getting rid of their low-denomination coins, why has the United States continued to produce the one-cent coin? Perhaps in part it’s because a surprisingly large number of Americans still have a place in their hearts – if perhaps not in their purses and pockets – for the coin many call the “penny”.
The “Penny Problem”
According to the 2018 United States Mint Annual Report, it costs 2.06 cents to produce, administer, and distributed a one-cent coin, up from 1.82 cents a year earlier. In fact, both the one-cent coin and the five-cent coin cost more than face value to strike and issue, with the “nickel” costing 7.53 cents each to produce, administer, and manufacture in Fiscal Year 2018 – up from 6.60 cents a year earlier.
Looking back over the cost of making the penny and nickel since the dawn of the 21st century, both denominations have lost money since 2006.
However, the majority of Americans in various surveys still love the United States one-cent coin. According to a 2019 poll released by Americans for Common Cents (ACC), 68% of Americans wish to keep the penny. These figures are similar to other findings in recent years; in 2014, an ACC poll found 68% of Americans wished to keep the one-cent coin, up one percentage point from a 2012 ACC survey finding 67% of Americans wanted to keep the penny.
A poll conducted by Huffington Post in 2014 gathered the feelings of Americans on the subject in a different way. It asked respondents to choose a word that would describe their feelings if the government stopped minting pennies; 34% responded with “disappointed”, 9% chose “angry” (angry?). Meanwhile, 9% said they would be “satisfied”, and 8% reported “happy”. The number of people who replied with “indifferent” or “sure” was 25% and 14%, respectively. But, really… angry? It’s hard to imagine huge numbers of Americans taking to the streets in rage if the United States stopped producing one-cent coins, but stranger things have happened.
Yet even if in the years ahead public opinion polls continue to suggest that most Americans want to keep the penny, it may not be enough to convince penny-pinching (pun intended) lawmakers to save the denomination. Numerous studies show that the United States government–and, by extension, taxpayers–would save tens of millions of dollars if the one-cent coin were eliminated, something that could be done only by an act of Congress.
Several lawmakers have proposed bills to eliminate the penny, including Republican Arizona Representative James “Jim” Kolbe (R-8), who twice unsuccessfully pitched such legislation, most recently in 2006. As with many issues before lawmakers on Capitol Hill, the penny attracts a plethora of lobbyists. These include Citizens to Retire the Penny, a lobby supporting the elimination of the one-cent coin. Another group hired by Jarden Zinc Products of Greeneville, Tennessee, which produces the zinc planchets used to make United States one-cent coins, rallies to keep the one-cent coin around.
* * *