penny, nickel and 5 dollar bill
by Roma Luciw
More than a year
after it called for the penny to be scrapped,
Desjardins Group says the government should also
banish the nickel, replace the $5 bill with a
coin, and think about creating a $200 bill.
If the Desjardins economists had their way, the
typical Canadian loose change drawer – and
wallet – would soon look pretty different.
“As prices rise in an economy, one of the normal
adjustments the government must make is to
change the denominations of both coins and bank
notes,” Jean-Pierre Aubry, an economic
consultant who co-authored the Desjardins study,
said in an interview.
The study, issued by the Quebec financial
institution on Wednesday, calls on Ottawa to
re-examine the usefulness of the coins and notes
circulating now and to come up with a long-term
plan for replacing them with cheaper, more
The Desjardins study suggests Canada start off
by “promptly” removing the one-cent coin from
circulation. The group first issued a report
last February saying that one-cent coins are
costing Canadian society at least $130-million a
The penny, which is increasingly obsolete, has
so little purchasing power today that people
either routinely refuse to take it as change or
have taken to hoarding it, Mr. Aubry said.
“These coins do not return to the system. That
is a sign that they must be removed,” he said.
After ditching the penny, Ottawa should retire
the five-cent coin and replace the $5 bill with
a coin of the same value, Desjardins said. The
next logical step would be to introduce a new
series of smaller and lighter low-denomination
coins, such as 10 cents, 20 cents and 50 cents,
as was done in New Zealand. Given the small size
of the current dime, the Canadian government
could opt to keep it.
Not only should the $5 bill be replaced with a
coin, but a new series of $1, $2 and $5 coins
could be introduced, ones that are lighter and
smaller than their predecessors.
“Imagine removing the one-cent coin or the
five-cent coin and introducing the $5 coin. Then
you can think about having smaller coins that
are worth more but that have less weight,” Mr.
Aubry said. “So we want Canadians to think about
where we want to end up 10 or 25 years down the
The Desjardins study also suggests that every
five years the government “evaluate the merits”
of introducing a $200 bill, taking into account
the other means of payment — such as debit and
credit cards, cheques, bank transfers — while
also weighing potential repercussions related to
illegal activities like money laundering and
The great Canadian penny debate was reignited
two weeks ago, when NDP member of Parliament Pat
Martin introduced a private member's bill that
calls for the elimination of the lowly coin from
Canada's monetary system by the start of 2009.
Scrapping the penny, which was at one time made
mostly of copper but is now composed largely of
steel, would save millions each year, Mr. Martin
Dalton McGuinty, the Premier of Ontario,
supported Mr. Martin's bill, saying it makes
sense for Canadians who want change by getting
less change in their pockets.
Any decision on whether to change bills or coins
– including scrapping or keeping the penny –
rests with Finance Minister Jim Flaherty, who
said earlier this month that he is not
interested in eliminating the one-cent coin
A call to the Ministry of Finance was not
immediately returned on Wednesday.
The Royal Canadian Mint says it costs 0.8 of a
cent to make a penny. A 2007 study by the mint
found that most small retailers are slightly in
favour of removing the penny while consumers are
divided on the issue. For many Canadians, the
penny is an integral part of this country's
That, according to Mr. Aubry, is no reason to
hang on to a currency that buys almost nothing.
“A currency is something important for a nation,
but it should be beautiful and meaningful [and]
it should also be useful. If we let people throw
away coins or not use them, it generates