The government already has 1.2 billion one-dollar coins just sitting in the Federal Reserve that nobody wants. Yet the U.S. still keeps making more dollar coins because Congress mandates it.
The dollar coin hasn’t been as popular as government officials originally had hoped, decades ago. Reporters say that when the dollar coin was introduced, people were confused because the size and shape closely resembled the quarter.
In September, U.S. Representative David Schweikert, Republican, from Arizona’s fifth district introduced a new bill called the Currency, Optimization, Innovation and National Savings Act (COINS Act). The COINS Act would kill the dollar bill and replace it with the dollar coin.
According to recent studies from the Government Accountability Office (GOA), the government could save $5.5 billion over the next 30 years. That would be a savings of approximately $184 million annually if they make the switch.
Reports say that the dollar coin cost more to manufacture compared to the cost of producing a dollar bill. However, it has also been reported that the average lifespan of a dollar bill is approximately 40 months while the dollar coin can circulate for 30 years. That sounds like a good way to save money, does it not?
Reports say that it will take approximately ten years to recover the money spent to make the switch. The GOA says 1.5 dollar coins will need to be made for every dollar bill currently in circulation. The reason for this is due to the habit of dropping loose change into a piggy bank at the end of the day. The coins you save in your “piggy bank” become an interest free loan to the government at your expense. So theoretically, some of that $5.5 billion savings would come out of your pocket just like coins.
There can also be a benefit to the switch if this inspires us lean more towards electronic payments. For example making payment for your cell phone bill or credit card online or over the phone. However, if the dollar bill becomes extinct, this may increase the demand for the $2 bill, but only time will answer that question.
There are still a lot of questions being asked on the practical and economic outlook of the situation. Some people are concerned about more coins weighing down their pockets. Others seem to wonder why we don’t rid of the penny or nickel instead.
My initial feeling was that this would save our government money. After speaking with a few of my peers, I found that most of them use their credit or debit card to pay for things already. I also thought about countries and their forms of currency. Canada made the switch in the 90s; the UK has the pound (‘88), and not to mention the Euro (’99).
Ultimately, I feel that if this is a good way for the U.S. government to start saving money, in the mist of our “struggling” economy, then lets do it.