National Coinage Proposals:

Limited Public Demand for New Dollar Coin or Elimination of Pennies

GGD-90-88: Published: May 23, 1990. Publicly Released: May 23, 1990.

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Pursuant to a congressional request, GAO reviewed proposed changes to the U.S. currency and coinage system, focusing on the: (1) feasibility and effects of replacing the paper dollar with a dollar coin; and (2) possibility of eliminating the half dollar.

GAO found that: (1) the government could save $318 million annually if it replaced the dollar bill with dollar coins, if dollar coins were widely accepted and used; (2) the savings would accrue primarily by reducing production and processing costs and the need to borrow from the public to finance the debt; (3) surveys and past conversion experiences indicated that widespread use would be unlikely unless the government eliminated the dollar bill in the face of a negative public reaction; (4) there is no comparable economic argument for eliminating the penny or the half dollar because both are profitable; (5) while retail businesses and the public recognized the inconvenience of pennies, the problems inherent in rounding off retail transactions to the nearest 5 cents were troubling; and (6) the European countries that have eliminated their lowest denomination coins all did so because production costs exceeded the coins' face value.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: No action is planned by the committee.

    Matter: Congress should proceed with the proposed dollar coin legislation only if it and the Administration can reach and sustain a joint resolve to eliminate the dollar note and stand up to an expected negative public reaction.

  2. Status: Closed - Not Implemented

    Comments: No action is planned by the committee.

    Matter: Congress should proceed with the proposed dollar coin legislation only if it funds a sophisticated and sustained public awareness campaign.

  3. Status: Closed - Not Implemented

    Comments: No action is planned by the committee.

    Matter: Congress should proceed with the proposed dollar coin legislation only if the Bureau of the Mint is able to produce a coin readily distinguishable from the 25-cent coin but still acceptable to the vending industry.

  4. Status: Closed - Not Implemented

    Comments: No action is planned by the committee.

    Matter: Congress should proceed with the proposed dollar coin legislation only if the Mint can produce sufficient quantities of the coin to meet all demand within 5 years of the coin's introduction.

 

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