The long, slow and profitable demise of the penny is now underway.
The Royal Canadian Mint has stopped distributing pennies to banks and other financial institutions, officially signifying that the one-cent copper coins will have a similar fate as chain video stores, film cameras and analog audio recordings.
The expression “a penny for your thoughts” will soon pointless in Canada; people will be seeking a nickel for their views on the world. And nobody will be able to find a penny on the ground and place it inside their shoe for good luck.
Pennies won't vanish immediately; it's expected to take several years for the penny to disappear from Canadian businesses. Remember when the Loonie and Toonie were introduced? It took a couple years before the $1 and $2 bills disappeared from Canadian cash registers.
The penny is the most common form of currency in Canada. It won't be easily eliminated.
Some people will mourn the penny's end. They have fond memories of when a penny could be used to purchase candy at the corner store. Or they'll remember how a lucky penny brought them good fortune.
From an economic perspective, the penny had to go.
The price of copper has quadrupled in the last 13 years. It now costs 1.6 cents to produce a penny. The deficit on one-cent coin production was as high as $11 million.
If a private corporation wants to take an $11 million financial hit to produce a product, then that's their prerogative. But when a federal agency like the Royal Canadian Mint is taking an $11 million hit on a product, then it's time for that product to be jettisoned.
Granted, it won't take long for that $11 million to be offset by government waste in other departments. But it's nice to see that the feds have found an area in which money was being wasted, and have found a solution to the problem.
There will be adjustments to life after the penny. Prices will have to be corrected. Some will be rounded down to the nearest nickel. Others prices will be rounded up. But for the most part, it's going to be a pretty marginal change. The average consumer won't notice much of a difference over the course of the year.
Even if all businesses were to round all their prices up to the nearest nickel, the difference should be negligible.
Gas prices might be troublesome. Have we seen the end of prices that are $1.08.9 or $1.17.9 per litre? Will prices now be $1.10, $1.15 or $1.20 a litre?
That could cause some headaches. But it's worth it for the federal government to save $11 million.