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One-dollar coins remain the red-headed stepchild of the currency familyDecember 5, 2013
Pennies, nickels, dimes and quarters, even fifty-cent pieces, to a degree, are a part of American financial culture.
So why, then, are the $1 coins so unpopular and unwanted?
A recent article, “U.S. Currency: Coin Inventory Needs Better Performance Information” yielded some startling statistics. They are so unused that the Federal Reserve Banks hold about $1.4 billion of these coins. This is a sufficient amount to meet demand for them for the next 40 years!
In fact, more $1 coins were actually given back to the Federal Reserve than the number that were paid out, and businesses gave back more $1 coins than businesses that asked for them.
In some ways, it’s a bit bewildering why dollar coins are not in more demand. After all, they are smaller and far more durable than their paper counterparts. They are even accepted in most vending machines. And the Federal Reserve estimates that if Congress decided to use metal coins rather than paper, it would save them $150 million per year.
Perhaps the best way to bring this about is to simply quit making paper dollars. In Canada and the United Kingdom, for example, metal dollars became the norm because there simply wasn’t any alternative and, over time, they became the accepted currency.
But in the minds of those in the Treasury Department, the court of public opinion wins the day. “Minting $1 coins that ultimately end up sitting in Federal Reserve Bank vaults – and serve no useful purpose for businesses, financial institutions and consumers – is simply not a prudent use of taxpayer resources.”
Why do people dislike them? One school of thought is that coins are not thought of as having much value these days – that any type of coin is just “loose change” and thus doesn’t have much value.
So, for now, we continue to make pennies (now largely zinc rather than copper) and nickels, which cost more to make than they are actually worth. Meanwhile, the production of the $1 coin has stopped, at least for now.
There will soon be a vote in Congress called the COINS Act (co-founded by John McCain) that would move the United States in the same direction as Canada and the UK, replacing the paper dollar with a coin. But this vote is expected to fail miserably.