Get rid of the penny, nickel and $5 bill: report
A new study suggests Canada should make major changes to its currency by eliminating the penny, nickel and the $5-dollar bill.
Desjardins, an integrated co-operative financial group, released the report Wednesday, which states that the first thing that needs to go is the one cent coin.
The group says the penny, which saw production rise 51 per cent in 2006, should have been eliminated in the early 80s.
"Due to the hoarding phenomenon -- stockpiled coins that serve no productive purpose -- merchants and financial institutions routinely need new coins for the retail distribution system," says the report.
"In fact, due to the resulting strong "artificial" demand, the RCM (Royal Canadian Mint) must produce more Canadian coins and cannot free up some of its production capacity to produce more lucrative foreign coins," says the report.
The overall production of coins in Canada rose sharply -- from 1.5 to 2.2 billion pieces -- in 2006, according to the RCM.
Desjardins said the "surge in production reflects the fact that Canadians increasingly hoard low-denomination coins rather than use them to pay for their cash purchases."
In a few years, the report suggests Canada should remove the five-cent coin and introduce a new series of smaller and lighter low-denomination -- 10, 20 and 50 cent -- coins.
"The government could decide to keep the actual 10-cent coin, given its current small size," says the report.
"Since removal of the nickel will then require rounding to the nearest 10 cents, the government could decide to replace the quarter with a 20-cent coin."
The report also calls for the $5 bill to be eliminated, similar to what was done with the $1 and $2 bill.
Instead, a new series of $1, $2 and $5 coins could be introduced, says the report.
"These coins should also be relatively lighter and smaller than their predecessors."
Lastly, the report suggests Ottawa should, every five years, evaluate the merits of introducing a $200 bill.
"Small coins will become increasingly obsolete and new, larger denominations of both coins and bank notes will be needed to finance daily transactions," Desjardins economists said.
"As is typical of a modern economy, inflation, over time, tends to increase denomination value rather than quantity."
Earlier this month, New Democrat MP Pat Martin introduced a private member's bill to kill the penny.
Martin said getting rid of the coin would save Canadians millions annually.
However, the chances of the private member's bill succeeding are slim since the majority of them fail.