The Zimbabwean Dollar officially vanished on 15th June. Those people unfortunate enough to hold any remaining Zim$ will have until September to exchange their bank notes for Uncle Sam’s at the rate of 35 QUADRILLION to one. Yes, that’s right: no spelling mistake. A quadrillion is ONE THOUSAND TRILLION or, to put it another way, ONE MILLION BILLION. I’m no expert on international commodity prices and the current price of waste for recycling, but at that rate Zim$ literally cannot be worth the paper they are printed on. One Zimbabwean quoted in the report says he used his for garden manure so they literally ain’t worth shit. Meanwhile, in Socialist egalitarian paradise Venezuela…
some part of Venezuela’s coinage is now worth more as scrap metal than it is as money. To the point that you’d probably do better by going and getting change from a bank rather than robbing it.[From The Mystery Of Venezuela’s Missing Coins – Forbes]
The smallest Venezuelan coins are now worth approximately 20 times as much as scrap metal as they are as money. That’s much better than in the US, for example, where minting the smallest coins only wastes a hundred millions of dollars or so per annum, a small price to pay for all those jobs at the mint and in the zinc supply chain. Yes, zinc. The “zinc lobby” continue to defend the insane practice of manufacturing pennies.
For the year, the cent generated negative seigniorage of $55 million and the nickel generated negative seigniorage of $49.5 million. These negative amounts were more than offset by the positive seigniorage from the other denominations.[From US Mint Releases Alternative Metals Research and Development Report | Coin Update]
So the Mint loses money on pennies and nickels and makes money on dimes and quarters. I say the message is clear: dump the pennies and nickels. Abandon the kind of negative seigniorage we associate with third-world Marxist central planning and let the market work. We should do the same here in the UK.
The penny is virtually worthless and useless; the 2p is absurdly large for what it is. So when it was introduced 40-odd years ago, one 2p coin was about enough to buy a second class stamp, or a Mars bar. Today you’d have to have a pile of 20 or 30 to do the same. The 5p should probably be the minimum unit, and prices rounded down to cope with it, as has happened in other countries in the same situation[From Should we get rid of the penny and 2p coins? – Business Analysis & Features – Business – The Independent]
Would it be such a big deal to just scrap the 1p and 2p? There’s no need to phase them or re-engineer them. As we move into the age of digital money they are past their sell by date. The Irish government ran an experiment on this last year: we should do the same and I suggest Swindon is the obvious place to begin..
A new national survey shows that [Irish consumers] favour the withdrawal of 1c and 2c copper coins. Some 85pc of consumers surveyed were in favour of extending an initiative nationwide to round up and down prices… The survey follows a pilot programme in Wexford where prices in shops were rounded to the nearest 5c at cash registers. The Central Bank has now recommended the roll-out of a voluntary scheme across the State aimed at cutting the use of 1c and 2c coins.[From Time for change as 85pc want to banish coppers – Independent.ie]
The Irish are not in vanguard here. in fact, the idea of getting rid of coins is widespread.
Five EU member states have already adopted a rounding policy that dispenses with the need for the small-denomination coins. The countries include the Netherlands, Sweden, Finland, Denmark and Hungary, while Belgium is currently in the process of adopting it.[From Time for change as 85pc want to banish coppers – Independent.ie]
Baronet Osborne should take the plunge. Enough is enough. Scrap the coppers. I’ve set up a national petition to ban the 1p and 2p piece in Swindon City-of-the-Future to celebrate the 20th anniversary of the launch of Mondex there. Help me to get this discussed in Parliament: join my campaign here! Well, if they re-open the UK government petitions site in time anyway.
If someone hasn’t started a blog called “Negative Seigniorage” by the end of today I shall be gravely disappointed.