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Agreed. Round everything to a tenth of a dollar. Replace quarters with 50 cent pieces and get rid of the nickels and pennies.

"According to the Bank of Canada's inflation calculator, the buying power of a penny in 1948 is about the same as a dime in 2010. Pennies and nickels are literally worthless: I defy you to enter any store, anywhere, armed with only 9 cents to buy something."

I just made the *exact* same point on John Palmer's facebook page not less than 15 minutes ago. Eerie.

What I don't understand is why the people who set up the euro chose to use 8 - count'em: 8 - coins. I mean, they were starting from scratch: no history, no "save the charmingly-nicknamed-but-completely-worthless-coin" pressure groups. And they went out and made it insanely complicated. Whatever for?

Mike: Yes, I should have given John credit for starting - more than 20 years ago! - the 'Ban the Penny' cause.

There is a certain logic to the EU system, since everything repeats the pattern 1, 2, 5. (1, 2, 5, 10, 20, 50, 100, 200, 500, etc.)

It'd have made sense to eliminate the 1, 2, 5 and started at 10.

I got this announcement from John: "Going to Ottawa on Tuesday to testify before a Senate committee on the elimination of the penny.... more details to follow in a day or so."

I remember him writing editorials to the Gazette and Free Press on this issue in the early-to-mid 1990s.

I was in Australia for over a week before I noticed that there's no pennies down under. Back in 2003 Dinu Chande and Tim Fisher published a cost benefit analysis in Canadian Public Policy making a strong case for ending the one cent coin.

Another poor aspect of Canadian currency design: the coins should go 5/10/20/50. Think about how many coins you need to buy something costing, say, 70 cents with a 5/10/20/50 system as opposed to the current 5/10/25. Have you ever noticed how useful toonies are? \$20 bills? How frustrating it is when you're in the US and there's no \$2 denomination? There is apparently some way of showing this mathematically but I don't remember how.

Mike: Excellent! I've added a credit to John for originating the campaign, as I should have done in the first place.

Newfoundland used to have 20 cent coins before Confederation.

The Bahamas still has them.

The Netherlands rounds all non-electronic transactions to the nearest 5 cents. They did this before the euro and to this day they don't accept or distribute the 1 or 2 euro cent coins. It works very well, though to do it you'll have to get through silly populists.

A good sign that the penny is truely worthless is the fact that even charities don't accept it. UNICEF dropped their penny Halloween campaign years ago.

Getting rid of 1 and 2 cent coins here in Australia was fantastic, I only wish we'd done the same thing for 5 cent coins. Most vending machines don't accept them, not even the Government's train ticket vending machines.

How about a policy in which the government offers to accept all pennies and nickels in exchange for quarters. This would be a non-monetary policy fiscal drop. Effectively, the government is paying people to go out, collect pennies, and turn them in.

It need not be funded by selling bonds, since the coins are issued by Treasury, not the central bank -- it is real seignorage to create more coins. A tiny stimulus that also achieves a monetary reform.

Nooo, noooo! Don't get rid of the Canadian nickel, please! I know they're only 2% nickel plating now but they're wonderful!

They show up how insane the Helms Burton Act is.

No, really....it's a Candian corporation (Sherratt I think?) which mines the Cuban nickel. Those mines having been nationalised by Castro. The Canadian Mint buys the nickel (the oxide is processed in Canada into the metal) to make the coins. Thus anyone entering the US with a Canadian nickel in their pockets is in breach of the Helms Burton Act.

That no one (naturally) has been prosecuted for this shows quite how silly the Act itself is.

Um, dudes, I don't know how to break this to you math geniuses, but you can't ban the nickel unless you ban the quarter, too. Think about it. ("asp" seems to have understood this)

Perhaps we should replace the penny and nickel and quarter with a 20 and 50 cent piece.

And if anyone really takes issue with the rounding, they can pay electronically to the nearest cent.

Stephen: "Mike: Excellent! I've added a credit to John for originating the campaign, as I should have done in the first place."

Excellent! I have no doubt he'll be pleased by that.

John: "Um, dudes, I don't know how to break this to you math geniuses, but you can't ban the nickel unless you ban the quarter, too."

Um, dude, several of us have already pointed this out.

Tim: "Thus anyone entering the US with a Canadian nickel in their pockets is in breach of the Helms Burton Act."

That's *excellent* - I've never heard that before. We teach a case on Sherritt in our 'Global Environment of Business' course at Ivey that touches on these issues. If we do the case next year I'll have to point this out.

Andrew: "And if anyone really takes issue with the rounding, they can pay electronically to the nearest cent."

The silly thing is, pretty much *every* transaction is already rounded thanks to sales tax.

Suppose you live in Ontario and buy \$67.21 worth of goods. If both GST and PST apply, then you need to pay a 13% sales tax and your total bill comes out to \$75.9473. At the register, the amount is rounded up to \$75.95.

The question isn't whether or not there's rounding (there's almost always rounding) - the question is "what do you round to"?

I agree Mike. I was referring to the precision of the rounding. No one objects to rounding to the nearest cent. Many would object to rounding to the nearest dollar, even if it was a wash, on average.

Was there ever a Canadian halfpenny (half-cent?) in 1908?

Aaar, when I was a lad, I remember farthings, as well as ha'pennies. Each farthing was worth 1/4 x 1/12 x 1/20 of a pound sterling. Now those were tiny coins, physically, as well as in value. Farthings, ha'pennies, threepenny bits, sixpences, shillings, florins (2 shillings), half crowns (2 shillings and 6 pence), crowns (5 shillings, very rare), ten shilling notes, and finally the pound note. Nine different subordinate coins/notes, below the pound. Then there was the "imaginary" unit of account, the guinea, worth 1 pound and one shilling, which didn't exist as a note or coin, but was used in auctions, for example (the auctioneer kept the shilling). And we had to do maths with that system! Kids today have it easy.

"Was there ever a Canadian halfpenny (half-cent?) in 1908?"

I don't believe so. As far as I know there haven't been any half-cent coins prior to Canada going on the dollar/cents system in the late 1850s.

The problem here is not banning certain coins or not, but the underlying reason for why these coins have lost most of their value and are now largely useless.

The debasement of money by incompetent central bankers is at the core of the problem. In another few years we'll be discussing banning the dime, and after that banning the quarter, and eventually the loony. Ban central banking and we won't be having this discussion anymore.

JP, I think most of the inflation damage was done under a different regime.

That said, 'pretty soon' would require approximately 35 years for the dime to decline in value to what the nickel is worth today. Approximately 155 years for the loonie to decline likewise. I think there are bigger problems.

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