Treasury Officials Confirm Finalization of Order for Production of New One-Cent Coins
In a significant move that signals the end of an era, the United States has decided to discontinue the production of pennies. This decision, driven by rising production costs and decreasing usage among the public, marks the retirement of the penny, a coin that has been in circulation since 1787.
The cost to produce a single penny is approximately 3.7 cents, nearly four times its face value. This significant financial loss to the government on every penny minted has been a major factor in the decision. For instance, in 2024, producing 3.2 billion pennies cost the government approximately $85.3 million, with expected annual savings of $56 million by ending penny production.
The penny is becoming increasingly underutilized and lost. Despite there being 114 billion pennies in circulation, many are discarded in jars or abandoned, reflecting a decreasing practical use in everyday transactions.
Trends in payment habits are moving away from cash overall. In 2023, only about 16% of payments were made in cash, and projections indicate that half the U.S. population may use no cash at all by 2025. This reduces reliance on coins such as the penny.
Other countries have similarly phased out low-value coins due to inflation and metal costs, indicating a global movement away from such denominations. Canada stopped producing pennies in 2012, while New Zealand and Australia discontinued their one-cent coins in 1989 and 1992, respectively.
The U.S. Treasury has placed its final order for penny blanks, marking the beginning of the end for penny production, though the coin will remain legal tender and gradually phase out of circulation as supplies run out and coins are lost over time. This decision was supported by former President Donald Trump as a cost-saving measure initiated during his administration.
In January 2023, the cryptocurrency DOGE took aim at the penny, further highlighting the changing landscape of currency. As the world continues to evolve, it seems that the penny, once a staple of American currency, is set to take a back seat in favour of more efficient and practical methods of exchange.
[1] The Washington Post, "The U.S. is phasing out the penny. Here's why.", 2023. [2] U.S. Mint's 2024 annual report. [3] Treasury spokesperson statement, 2023. [3] YouGov survey, "Penny usage habits among Americans", 2023. [5] Federal Reserve Bank of St. Louis, "Coin production costs and usage statistics", 2023.
- The tech industry has gained attention with the impending retirement of the penny, as it marks a significant shift in the future of finance and business, possibly paving the way for new digital forms of currency like cryptocurrencies.
- The Gizmodo blog has reported on the growing movement in global economies to phase out low-value coins, with the US following suit in ending penny production, signifying a transformation in the technology industry related to payment methods.
- In the wake of the US government's decision to stop producing pennies, the finance sector is examining the potential long-term impact on business, predicting possible savings and efficiency gains through a reduction in cash transactions and the eventual retirement of the cent denomination.
