President Trump has ordered the U.S. Treasury to stop minting the penny, a costly endeavor. The penny remains popular due to political and practical reasons, as its elimination could lead to price rounding concerns. Conversely, St. Kitts has eliminated the one-cent and two-cent coins due to production costs, maintaining only the five-cent coin in circulation.
President Donald Trump has instructed the U.S. Treasury to cease the minting of the penny, which is currently produced at a cost exceeding its nominal value of one cent. Despite efforts since the 1990s to eliminate the penny, it remains in circulation due to its political popularity and practical challenges associated with its removal.
The continued use of the penny is attributed to numerous factors, including a reliance on precise pricing by consumers and businesses. The removal of this coin would necessitate the rounding of prices, which may increase customer apprehension regarding potential higher costs.
Various stakeholders benefit from the penny’s continued production and supply, contributing to its prevalence. Factors such as tradition, convenience, and broader economic considerations regarding pricing ensure that the penny remains despite its production costs exceeding worth.
The withdrawal of the penny might prompt rounding cash transactions to the nearest five cents, possibly fostering a shift towards digital payments, which facilitate precise transactions without rounding. Research indicates that such rounding would minimally affect overall pricing and inflation rates.
In St. Kitts and Nevis, the smallest legal tender is the 5-cent coin, which measures 23.11 mm in diameter, weighs 1.74 grams, and is composed of aluminum. The Eastern Caribbean Central Bank (ECCB) decided to withdraw both the one-cent and two-cent coins from circulation as of July 1, 2015, due to their limited purchasing power and high production and handling costs. This scenario highlights parallel concerns regarding the costs associated with producing lower denomination coins, such as the five-cent piece, which are manufactured at the Royal Mint in London, incurring additional shipping expenses.
In summary, while the U.S. considers discontinuing the penny due to its cost inefficiency, it remains entrenched in American commerce due to political, economic, and societal factors. Conversely, St. Kitts and Nevis has moved forward by eliminating smaller denomination coins in response to similar concerns, leading to significant changes in currency circulation. The issues surrounding coinage reflect broader themes of economic practicality and consumer behavior in transaction processes.
Original Source: www.thestkittsnevisobserver.com
