General Government: U.S. Currency
Year Identified: 2012
Area Number: 42
Area Type: Cost Savings & Revenue Enhancement
Status:Consolidated or Other
◐- Partially Addressed
○- Not Addressed
◉- Consolidated or Other
⊘- Closed-Partially Addressed
⊗- Closed-Not Addressed
Last Updated:March 6, 2014
To reduce the costs associated with the $1 note and $1 coins in the long term, Congress may wish to consider replacing the $1 note with a $1 coin to achieve an estimated financial benefit of $4.4 billion over 30 years. Legislation has been proposed that would make this replacement.
As a result of decreasing estimates of financial benefits to the government resulting from changing note production technologies, GAO is no longer tracking this action. Congress has not enacted legislation to replace the $1 note with a $1 coin, as GAO suggested in March 2011. Two bills to replace the $1 note with the $1 coin have been introduced in the 113th Congress. These bills are S. 1105 and a similar House companion bill, H.R. 3305, the “Currency Optimization, Innovation, and National Savings Act.” The Senate bill was introduced on June 6, 2013, and the House bill was introduced on October 22, 2013. Although both bills have been referred to the committees of jurisdiction, neither had been reported out of the committees as of December 2013.
Since GAO suggested this action in March 2011, the financial benefit of replacing the $1 note with a $1 coin has decreased. The Federal Reserve has improved note-processing technologies, resulting in a longer lifespan for the $1 note. In March 2011, GAO estimated $5.5 billion in financial benefits over 30 years based on a lifespan of about 3.3 years for the $1 note. In February 2012, the estimated financial benefit had declined to $4.4 billion over 30 years based on the lifespan of the $1 note extending to about 4.7 years. Because of improved technology and policy changes by the Federal Reserve, the note life increased to 5.9 years as of December 2013, which would result in a lower financial benefit. Over time, additional changes in technology, procedures, and policy related to the $1 note could further decrease the financial benefit of replacing it with a $1 coin. Additionally, the U.S. Mint no longer produces $1 coins for circulation and relies on the inventory of $1 coins to meet the relatively small transactional demand, resulting in a leveling off in the inventory of these coins.