I knew this would happen, but I’m not sure I’d have guessed it would be this fast.
The corpse of the Canadian penny hasn’t even finished cooling off yet and already there are folks calling for the end of not only the nickel, but the dime as well.
The arguments are similar to the ones I, people much smarter than me and even Jim Flaherty made when making the case for the death of the penny, so it’s hard for me to disagree. The only thing I’d like to see before we get too coin killing crazy are clear rules for price rounding set in stone. If we already have those, neither I nor anyone I’ve talked to seems to have a clue what they are.
New Zealand killed its five-cent coin (worth about four Canadian cents) in 2006 and its economy — and consumer spending habits — haven’t missed a beat. Australia got rid of its one- and two-cent coins way back in 1991 and has been considering eliminating its five-cent coin since seeing New Zealand’s successful downsizing.
Granted, Canada may have a bit more of an emotional attachment to the nickel than others countries since, for much of the 20th Century, we were the only nation in the world to make our “nickels” from pure (well, 99.9 per cent pure) nickel right out of the Canadian Shield.
But those days are long gone. Now the Canadian “nickel” — like our dime, quarter and 50-cent piece — is a slug of steel plated in a copper-nickel alloy. So forget the emotional attachment. And, like the penny, the nickel is fast closing in on the point in time when it will cost more to produce than its worth, even though it’s now 94.5 per cent steel.
Let’s just accept the fact that the nickel should go the way of the penny — into oblivion.
Former Bank of Canada economist Jean-Pierre Aubry was advocating the abolition of the penny a decade before its actual demise. Now he has his sights set on the nickel because it too is getting too expensive to produce and people just aren’t using the coin much anymore.
“We see less and less people now … digging in their wallets for nickels,” Aubry told the Canadian Press recently. “It’s a sign that the coin is not well used.”
As for the dime, well, that may be a harder sell. There could be complications arising from a currency in which the smallest coinage is 25 cents, even though inflation will continue to gnaw away at the real purchasing power of the dollar and its sub-units.
No economist is seriously recommending the demise of the dime — yet.
But inflation’s creep is inexorable and the dime’s day of reckoning is inevitably coming — perhaps not in this decade, but in the foreseeable future. After all, 10 cents today is only worth the equivalent of half a penny in 1914. And even then Canadians knew better than to have a half-penny cluttering up our currency and wearing holes in our pockets.