USA: No $1 Banknotes if Currency Optimization Act Passes

Started by Bimat, September 25, 2011, 04:51:24 PM

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Bimat

Issue Date: Vol. 51, No. 10, October 2011, Posted On: 9/25/2011   

Replace Dollar Bills With Coins In Four Years, Urges Congressman

Marcus Webb

WASHINGTON -- The U.S. would stop printing $1 banknotes and replace them with $1 coins if Congress decides to pass the new Currency Optimization, Innovation and National Savings Act, or COINS.

COINS was introduced on Sept. 20 by Rep. David Schweikert (R-AZ), who serves on the House Financial Services Committee. The freshman congressman from Arizona has been the strongest supporter of dollar coins, largely because minting more coins would benefit Arizona's copper mining industry.

But Schweikert emphasized the measure's potential to help reduce the federal deficit. Citing a recent study by the Government Accountability Office, he said replacing dollar bills with dollar coins would save an average of $184 million a year, amounting to at least $5.5 billion over 30 years.

"At a time when we are staring down a record-breaking $1.3 trillion deficit, any commonsense measure that cuts billions needs to be given serious consideration. That is exactly what the COINS Act will do," Schweikert said.

The COINS Act is the first positive publicity that dollar coins have received after many months of unfavorable publicity. In March, the U.S. Treasury admitted to storing one billion unwanted dollar coins in a federal vault -- and that stocks are expected to reach two billion in five years. The following month, a California congresswoman introduced a bill that would force the U.S. Mint to stop producing dollar coins in the Presidential series.

Not long after, the Mint announced it was changing procedures for online consumer purchases of dollar coins in order to stop enterprising citizens from buying the coins in bulk with credit cards to get frequent flyer miles, then turning the coins over to banks rather than spending them and getting them into circulation, as the program was intended to do.

Source: Vending Times
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

andyg

Quote from: Bimat on September 25, 2011, 04:51:24 PM
The freshman congressman from Arizona has been the strongest supporter of dollar coins, largely because minting more coins would benefit Arizona's copper mining industry.

This tells you everything you need to know about why US 1$ notes are still printed - because so far the paper lobby has the upper hand....
always willing to trade modern UK coins for modern coins from elsewhere....

chrisild

Hmm, somehow the topic title makes no sense to me ...

Christian

Bimat

It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

chrisild

My "problem" with all those initiatives and bills is ... they won't fly. If you look at the coin denominations that actually circulate in the US, in the sense of change that you get and money that you then spend again, there aren't that many. The quarter, OK. But apart from that? Now the pennies, nickels and dimes you may simply take home, and later take them to the bank or donate them maybe.

In countries where people regularly use (ie. get and spend) coins of various denominations, it will be (relatively) easy to introduce a new coin. Other than that, well, habits die hard. ;)

Christian

Figleaf

The impact of a change from note to coin is highly overestimated, methinks. Changing from a paper to a metal dollar is far less dramatic than e.g. decimalization in Britain or the introduction of the new franc in France, let alone the introduction of the euro. On these occasions also, detractors predicted the end of the world and nothing happened.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

kena

The US already has a mountain of dollar coins that have been made just sitting in vaults.

http://www.npr.org/2011/06/28/137394348/-1-billion-that-nobody-wants

There are now about 1.2 billion dollar-coin "assets" chilling in Federal Reserve vaults, unloved and bearing no interest. By the time the presidential coin series finishes, and there are coins honoring all past presidents, there could be 2 billion.

There have been calls the mint to stop making the dollar coins since they are not used much.

In order to get the bills thru to approve the current dollar coin programs, they avoided the topic of stopping the dollar bill.

Cash drawers will be a problem....since there are only spots for cents, nickels, dimes, and quarter coins.  No place for half dollars or dollar coins.  This was true even back in 1980.

Ken


chrisild

Quote from: Figleaf on September 25, 2011, 09:58:08 PM
The impact of a change from note to coin is highly overestimated, methinks.

Provided that people actively use coins as means of payment at all. If they by and large think that coins are primarily a nuisance, and use one denomination at best, things look a little different. By the way, Schweikert also wants to get rid of the SBA dollar, at least in the US: http://www.gpo.gov/fdsys/pkg/BILLS-112hr2977ih/pdf/BILLS-112hr2977ih.pdf

Well, of course this initiative may turn out to be more successful than any of the numerous previous attempts of phasing the low value paper money out. I doubt it, but who knows ...

Christian

chrisild

Quote from: kena on September 25, 2011, 10:08:48 PM
Cash drawers will be a problem....since there are only spots for cents, nickels, dimes, and quarter coins.  No place for half dollars or dollar coins.  This was true even back in 1980.

Well, the half dollar is practically dead anyway. There are not even half hearted attempts at making that giant a circulating coin. ;) As for the $1 coin and the cash drawers, phase the penny out, voilà. But heck, we cannot get that done here either. Not in the euro area (except for two member states) and not in the UK ...

As for that mountain of $1 coins, see this topic:
http://www.worldofcoins.eu/forum/index.php/topic,10517.0.html

Christian

Coinsforever

I would rather say that metal prices will not go down in future  if  this bill will be passed.


Cheers ;D
Every experience, good or bad, is a priceless collector's item.



http://knowledge-numismatics.blogspot.in/

kena

I remember when the SBA dollar coin was release in the US.

It was called the Carter quarter since most people who did not know about coins, could not tell them apart from a quarter.

Not sure how they would remove all the SBA coins since you still can obtain the large Ike dollars from some banks.

I wonder if the elimination of the $1 bill would just lead to more use of the $2 bill instead of more use of dollar coins.

Ken

Figleaf

Even a more intensive use of the $2 note would be a winner. The cost of printing the $1 and a $2 note must be the same. However, for each note printed, the US government receives a free credit of the value of the note, until it must be destroyed. Suppose the two denominations will remain in circulation equally long before they are too worn (in theory, the $2 note should have a longer life span). That means the gross profits from banknote printing will double for every $1 replaced by a $2 note. In theory, there would be a need for only half the quantity of $2 notes for replacing $1 notes, but in practice, demand would increase. However, even if the gross profit would be completely wiped out because people are perfectly rational (they seldom are), you would still come out winning on net profits because printing cost would be halved.

Of course, one way or the other, any profit to the US government is a profit to US tax payers, even if it is not distributed to them: the profit will diminish government debt, therefore interest paid on it.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.