As part of a series of cost-cutting measures announced by Canada's prime minister, Stephen Harper, during the annual budget, the country will stop manufacturing its one-cent coin today.
The penny, which was introduced in 1858, costs about 1.6 Canadian cents to make. By abandoning it, the Canadian government is expected to save about C$11m. Finance Minister Jim Flaherty said in March: “The penny is a currency without any currency.”
The mint will continue to distribute the remaining pennies it has in its inventory through the autumn. After that, it will begin to recover rolls of pennies from banks. The coins will be melted down and the metal sold off.
Alex Reeves, spokesman at the Royal Canadian Mint in Ottawa, said: “Only about 4.5 per cent of recently issued pennies are actually copper; the rest [is] steel. But before 1997, the coin was mostly copper. It remains legal tender and until that changes, its potential to circulate will continue.”
Countries such as Sweden, Finland, and the Netherlands have also eliminated their one-cent coin.
Douglas Porter, deputy chief economist at BMO Capital Markets in Toronto, estimates that the loss of the penny will lift inflation in Canada by "at most" 0.01 per cent.
Bret Evans, managing editor of Canadian Coin News, said: “It’s a sad day for coin collectors but intellectually it’s inevitable. If someone drops it on the ground, you typically don’t pick it up, which tells you it has no perceived value any more.”