Master Plan for US Coinage

Here is my proposal for our coinage:

0) Make plans to eliminate the cent starting in 2010 (as in, the cent would not exist in 2010). Cents would continue to be minted in their current composition through 2009. I realize that this would be at a loss to the mint but the positive seignorage that would come from other pieces would make up for this loss (as they are currently doing). Starting in 2009 all cash transactions would be rounded to the nearest 5 cents. That is, they will be rounded down for transactions ending in $0.01 or $0.02 and rounded up for $0.03 and $0.04. Electronic purchases would continue to be to the cent. However, “cash back” debit card purchases would automatically be rounded up to the nearest nickel. This is true even for totals ending in $0.01 or $0.02.

1) Just a small detail: cents would not be struck in 2010 or beyond even for collectors. When the half cent was eliminated in 1857 they were not struck beyond that for collectors' sentiments. When the cent is no more, it shouldn't exist in collector sets either.

2) The 5 cent piece needs a new composition. This can happen sooner than the timeline for the the cent. Implementation of this plan could begin as soon as 2008 if Congress would act, or more likely in 2009. As I am sure to state again, Americans are stubborn people and would probably not do too well with an overload of change (pun intended) so the size of the 5 cent piece would remain unchanged but its composition could be similar to the Canadians with nickel plated steel. This will significantly reduce manufacturing costs but keep the coin looking like it does currently. Plus you'll have the added advantage of being able to pick them up with magnets. :-) Yay for ferromagnetic materials!

3) Eliminate the dollar bill. As I have stated previously it would save a lot of money and would allow the BEP to put more effort into printing $2 bills. The $2 bills could go in the slot previously occupied by the $1 bill, the $1 coin would go where quarters are now and everything would shift down by 1 tray. I know that this would cause some people to complain but in probably a few months they'd calm down. Also, since $2 would become the lowest denomination bill, it would eliminate the complaint that change from a $5 for a <$1 purchase would yield 4 $1 coins.

In this way, the US government could streamline our money making it more efficient while also increasing demand for the dollar coins they keep legislating. The public would quickly realize that it is more efficient and enjoy it. I'm imagining it would be like Britain when it switched from its old currency (with a pound being 240 pence) to a base ten system. I'm sure there were diehards who resisted but it made sense and no one seems to really complain about it (from the Brits that I have met).