After more than 230 years! The legend is going away! The US mints have stopped producing one-cent coins. The last so-called “penny” was minted last week on Wednesday in Philadelphia, ending one of the longest-standing monetary traditions in the history of the United States.
US President Donald Trump ordered this measure back in February after the Treasury Department estimated that the production of the smallest coin in circulation now costs about four cents – four times its face value. The main reason for this is the high costs of copper and zinc, which make up the modern one-cent denomination. According to the White House decision, the production of “penny” is being discontinued for economic reasons, as the coin is increasingly rarely used in everyday payments and is burdening the state budget. Treasury Secretary Brandon Beach said the last coins minted would be auctioned off, with the proceeds going to heritage preservation programs. The last pennies to be put into circulation were minted in June. However, one-cent coins will continue to be legal tender, with approximately 114 billion in circulation. The one-cent coin has deep historical roots. It was first introduced in 1793, and since 1909, it has featured former President Abraham Lincoln, a symbol of American statehood and democracy. In the future, American businesses will have to round up prices to the next larger coin – the five-cent (“nickel”) – when making cash payments. However, some trade associations have already expressed dissatisfaction with the lack of clear instructions from the government on how to implement the new rule. American media reported, citing the coin manufacturer’s forecast, that stopping the production of one-cent coins would save the state about $56 million (approximately €50 million) per year. Historical context and economic impact The decision of the United States has not only financial but also symbolic significance. It marks the end of an era in which small coins played an important role in building national identity and financial culture. “The production of cash must follow the logic of the times – and the times are now digital,” commented American analysts, according to whom the decision is part of a broader trend of transition to cashless payments and optimization of government spending. However, experts warn that the symbolic charge of the decision is significant: the coin with Lincoln’s face is not just a means of payment, but a historical and cultural icon, part of the national memory. Therefore, it is expected that the last copies will be sought after by collectors, and their price at auction may exceed the face value by thousands of times.
European parallels
The topic of eliminating the smallest coins is also being discussed in Europe. In a number of eurozone countries, including Finland, the Netherlands, Slovakia, Ireland, Italy, Belgium and Estonia, cash payments are already legally rounded to the nearest five cents. While one- and two-cent coins remain legal tender, they are gradually disappearing from everyday use in many countries. Figures from the German Bundesbank show that around 80 percent of one-cent coins and 75 percent of two-cent coins in Germany are not in circulation – they are kept at home, lost or used for donations. The German central bank and the National Forum for Cash raised the issue again at the beginning of the year.
“The economic and environmental costs of producing, packaging and transporting one and two cent coins are disproportionately high compared to their value,” said Bundesbank Board Member Burkhard Balz, quoted by DPA. According to him, eliminating small denominations would make money circulation more efficient and sustainable, while also reducing administrative costs for retailers and banks. However, not everyone shares this opinion. The HDE trade association said it “is not actively advocating the introduction of a rounding rule, as odd prices are often a tool for competition in the retail trade.” At the same time, representatives of consumer organizations note that many people do not like carrying small coins, as this slows down payments and creates inconveniences in everyday life. Broader trend According to recent Eurobarometer surveys, a majority of European citizens support the abolition of one and two cent coins. The main arguments are economic, but also environmental – the mining and processing of metals for small coins has a high carbon footprint with minimal real benefit. Data from the European Central Bank shows that one- and two-cent coins account for over half of all coins by number, but only about 7 percent of their total value.
Washington’s decision likely marks the beginning of a new trend in global monetary policy, in which countries increasingly consider not only the nominal but also the real value of money.
Illustrative Photo by Pixabay: https://www.pexels.com/photo/copper-colored-coin-lot-259165/
