Canadian Penny Transition Out of Circulation Longer than Expected
The Department of Finance Canada announced today that the Royal Canadian Mint is postponing the penny’s discontinuation until February 4th, 2013. Originally slated to be discontinued in Fall 2012, the revised date is due to consultations with small businesses and retailers who express concern of the penny being transitioned out of circulation before the busy holiday season.
“Setting a clear transition date will allow consumers, businesses, charities and financial institutions to plan accordingly in the lead-up to February,” said Minister Flaherty. “We want to thank all Canadians for sharing their views with us, especially as it relates to this transition.”
The Harper Government announced this change to the Canadian currency in their Economic Action Plan 2012. Coming to the conclusion of getting rid of the penny came from a variety of factors including the penny’s excessive and rising cost of production in relation to its face value, its decrease in circulation due to pennies being accumulated in Canadian households, environmental considerations and handling costs. The Harper Government’s elimination of the penny from Canadian currency is expected to save taxpayers approximately $11 million annually.
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Once the penny is out of circulation, daily cash transactions will be rounded to the nearest five-cent increment “in a fair and transparent manner.” The Government plans to adopt a rounding guideline that has been utilized in other countries for Canada’s cash transactions.
The Government reassures that the new transition date will not create a need for the Royal Canadian Mint to produce more pennies as its existing supply should be more than enough for the period.