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Do you agree with the plan to phase out the US penny? [1]
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Date: 2025-06-03
The U.S. Treasury has announced plans to phase out production of the penny. This means that no new one-cent coins will be introduced into circulation once the existing supply of blanks runs out. The change, ordered by the Trump administration, is driven by a longstanding concern: pennies cost more to make than they’re worth, generally over three cents per coin. Businesses and consumers who still use cash will have to make transactions rounded to the nearest nickel.
Consumers with pennies will still be able to use them for purchases. But without new pennies moving into circulation, businesses that complete cash transactions will have to start rounding up or down to the nearest nickel. — cnn.com The Treasury unveils its plan to kill the penny
This conversation isn’t new. Economists and policymakers have debated eliminating the penny for decades. The logistics, however, are more complicated than they appear. If the penny disappears, retailers would need to round prices sometimes up and sometimes down which could slightly benefit or disadvantage consumers depending on the context. While the Treasury estimates a taxpayer savings of $56 million by cutting penny production, that’s offset by the cost of making nickels, which are even more expensive at nearly 14 cents per coin. With the likely increase in nickel demand, the net financial gain may be minimal or even negative.
The U.S. wouldn't be the first country to ditch its lowest denomination coin. Canada eliminated its penny in 2012, and prices are now rounded to the nearest five cents. New Zealand, Australia, and Sweden have also retired low-value coins without major disruption. While some feared inflation or confusion, most transitions were smooth. Canada, for example, saw no significant price increases and benefited from faster checkout times and reduced production costs. Still, not all countries navigate the change without friction—rounding rules, consumer trust, and point-of-sale systems all play a role in how well it works.
Even with this phase-out, the penny won't vanish overnight. Pennies already in circulation will remain legal tender and likely continue to appear in our pockets, drawers, and sidewalks for decades. And alternatives remain on the table. The government could switch to cheaper materials, like steel or aluminum, though this would require legislative approval and new minting infrastructure. Some suggest keeping the penny but reducing mint volume to cut costs over time. What do you think? Do you agree with the plan to phase out the U.S. penny?
Listen to the discussion on this episode of Nuance
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