In the United Kingdom, that old phrase about being “penny wise and
pound foolish” might need an edit.
Changes to the payment structure could render 1- and 2-penny coins
obsolete, and perhaps even eliminate the £50 note to thwart illegal activity.
The chancellor of the exchequer, the cabinet position over the
Treasury, released an annual statement on March 13 about a broad range
of financial topics.
Seeing doubled elements on a Lincoln cent? You
might have a doubled die variety. Also in this
issue, we reflect on a time when U.S. paper money depicted living persons.
In the report, the chancellor pointed to research that indicates a
dwindling need for the two smallest denominations in the United Kingdom.
“Surveys suggest that six in ten 1p and 2p coins are used in a
transaction once before they leave the cash cycle,” the report said.
“They are either saved, or in 8 percent of cases are thrown away. To
meet demand created by such losses from circulation, in previous years
the government and the Royal Mint have needed to produce and issue
over 500 million 1p and 2p coins each year to replace those falling
out of circulation.”
That demand is not expected to last, thanks to increasing use of
digital payments, especially for £5 or less, and so the Treasury is
spelling out a future that many other countries have adopted.
Australia, Canada, New Zealand and other nations have already
eliminated the 1-cent coin, and in some cases the 2-cent and 5-cent coin.
The U.K.’s penny and 2-penny coins are worth roughly 1.4 and 2.8
cents U.S., respectively.
If the move is implemented, withdrawing the two denominations would
be the second major decision involving U.K. circulating coinage in the
past year. The adoption of a new and reportedly more secure pound coin
in 2017 led to old “round pounds” being redeemed to banks, but also
swept in with that tide were the other denominations, especially the
smallest ones, according to the Treasury.
This surplus of coinage, coupled with growing use of digital
payments, means that the Royal Mint won’t need to make as many of
For now, the U.K.’s Treasury department is merely soliciting “A call
for evidence on the role of cash and digital payments in the new economy.”
In real language, that means that residents can submit comments
about how they want to maintain or modify the cash system in place now
that uses eight denominations of coins and four denominations of paper money.
“Should the UK follow a similar pathway as other countries in
modernising the currency?” the Treasury asks.
U.K. residents can respond with comments through June 5, 2018.
Two different reverse designs for both of the penny and 2-penny
coins co-circulate currently.
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