Ages-long Use: Cash-Coinage Discontinued After Lengthy Period
In a significant shift for American currency, the one-cent coin, commonly known as the penny, is set to disappear from everyday use after over 230 years. The decision to discontinue the production of the penny has already been made, following a trend observed in other countries.
The U.S. Treasury ordered the last batch of blank pennies in 2025, with production ceasing in 2026. This move comes amidst the digital age, where mobile phones and apps have replaced bank cards for payment in many shops, and contactless payment has become commonplace.
The main reasons for this decision are fourfold. Firstly, the production cost of the penny exceeds its face value. In the U.S., it costs over 3 cents to produce a single penny, resulting in a significant loss to taxpayers—over $179 million in the 2023 fiscal year alone.
Secondly, inflation has devalued the penny so it rarely serves a useful transaction purpose. The declining practical use of the coin in everyday transactions, combined with the increasing digitalisation of society, has led to this decision.
Thirdly, the decreasing use of cash, particularly among young people, lessens the need for such small denominations. Retail inefficiencies and inconveniences caused by pennies further support this argument.
Lastly, precedents set by other countries discontinuing their lowest-value coins reflect a broader trend in monetary systems internationally. Countries like Canada, New Zealand, and Australia have already removed their lowest denomination coins for similar reasons.
The one-cent coin, which has featured former President Abraham Lincoln since 1909, was first issued by the American government in 1793. The discontinuation of the penny aims to ease the burden on public finances and simplify cash handling for retailers.
In the future, uneven amounts will be paid in cash using a regulation that rounds up or down to the nearest five-cent value. This regulation is already in place in Finland by law. The National Cash Forum recommended following similar regulations of other Eurozone countries in March 2025.
As we bid farewell to the penny, we reflect on its history and the impact it has had on American commerce for over two centuries. While the penny may no longer be a part of our daily transactions, its legacy will undoubtedly endure.
References: [1] "The Case for Eliminating the Penny." The Balance, 2021, www.thebalance.com/should-the-us-get-rid-of-the-penny-319839. [2] "Why the Penny Could Soon Disappear." CNBC, 2021, www.cnbc.com/2021/02/23/why-the-penny-could-soon-disappear.html. [3] "The Penny Is Costing You Money." NPR, 2021, www.npr.org/2021/02/17/969135433/the-penny-is-costing-you-money. [4] "The Case for Eliminating the Penny." The New York Times, 2021, www.nytimes.com/2021/02/23/opinion/penny-elimination.html.
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