Penny Costs Two Cents To Produce; No More Coins For The U.S.?
A penny costs two cents to make, according to a report in the Associated Press.
The article cites a report from Congress that attempts to figure out a way to decrease the cost of creating currency. Since a penny costs two cents to make and a nickel costs over 11 cents, the U.S. Mint is trying to figure out a way to save money in coin production without changing the coins' appearance or quality.
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This study looked at 29 different combinations of metals, trying to find one that would reduce the cost of pennies and other currency. However, the Treasury Department did not find any conclusive ways to reduce the cost of a penny below two cents. Instead, different alloys will likely be tested in the upcoming year.
The US Treasury is also looking at potential ways to decrease the cost of other currency besides the penny. Many of these possible options would lead to changes to the magnetic properties of pennies or other coins. This then would cause problems for the vending machine industry, as those machines, The industry feels that this plan to change the cost of pennies or other currency could cost between $700 million and $3.5 billion. The Mint, meanwhile, has a slightly lower estimate of $380 million to $630 million.
Another hurdle for reducing the cost of pennies from two cents is the rising price of metals used in coins. Both copper (which is used in all coins) and nickel (which is used in every coin except the penny) have risen in cost as of late.
Thus, the US Mint is looking towards other, cheaper metals, such as steel, aluminum, and zinc. However, changing coin composition likely would not cause the cost of the penny to drop below two cents. That's because Dick Peterson, the acting director of the Mint, believes there is little monetary advantage involved in changing the metals used to make the penny. Instead, that cost would likely be offset by changing the compositions of nickels, dimes and/or quarters.
As we previously reported, America is struggling with the costs of creating and distributing other forms of money as well. Even though the penny costs two cents to produce, the Government Accountability Office believes that switching from $1 bills to coins could save America $4.4 billion over the next 30 years. However, this plan does not seem to be popular with the public.
Unlike $1 bills, pennies will likely not be going away anytime soon, even if they do cost two cents to produce. The AP reports that over 6 billion of the copper coins are produced by the US each year.
You can read the entire study that reveals a penny costs two cents here.
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