A report released last week shows some big advantages to scrapping the paper $1 bill in the United States and fully adopting the $1 coin in its place.
The report states that “It is rare to have an opportunity to implement a policy that can save American taxpayers billions by reducing the nation’s deficit, save small businesses and public agencies money, and help the environ- ment. Switching from the dollar note to the dollar coin is one such rare policy opportunity. It is a sim- ple, common sense change, which could accomplish all of these important objectives, has bipartisan support in Congress, as well as the support of two-thirds of the American people. It has been proven successful numerous times in Canada, Europe, England, and all other major industrialized nations. With the current focus of the Administration and Congress on reducing the deficit and promoting economic growth, there is no better time than now to modernize our one dollar currency to the coin.”
The report claims that Canada has reaped “tremendous success” with both a one dollar and two-dollar coin.
The $1 coin costs more to produce (18 cents) than the paper dollar (5 cents) but last much longer (30 years for the coins versus less than 5 for the paper note).
The report concludes that “The dollar coin saves the government money. The natural question is, how much does it save? The Government Accountability Office (GAO) is Congress’ budget watchdog, which frequently investi- gates the inner workings of government with an eye to boosting efficiency. It should come as no surprise then that the GAO has published on this topic extensively, recommending to Congress in eight separate reports over the last twenty-three years that the U.S. government should switch from a dollar note to a dollar coin. In its most recent estimates, in 2012 and 2013, GAO calculated that the switch would save $4.5 billion over 30 years. In 2011, GAO estimated that it would save the US Government $5.5 billion to switch from dollar notes to dollar coins, over a 30-year time horizon.”
The two major reasons driving the change in this estimate were:
1) An increase in the estimated life span of the dollar note from 40 months to 56 months (which was previously addressed); and
2) The U.S Department of Treasury’s December 2011 decision to suspend production of ad- ditional circulating dollar coins.