$1 coins instead of bills? Use of coins instead of bills can save a lot of money for the government, GAO says

By on Nov 29, 2012 in Finance, United States Comments

$1 coins instead of bills? This is the question that most Americans are now asking after the Government Accountability Office (GAO) reported that circulation of coins instead of bills can save a lot of money for the US government, recommending the stop of printing dollars and make more $1 coins instead.

$1 coins US dollar bills

$1 coins and a dollar bill
Image Credit: Coinupdate.com

As noted at CNN Money on Wednesday, November 28, 2012, GAO reported that production of one-dollar usually costs about 30 cents for the U.S. Mint, and the US government can sell them to Americans for a dollar per piece, which typically last around 30 years.

On the other hand, GAO estimates that printing of dollar bills costs around 5 cents each, which is much cheaper than producing $1 coins. However, bills are being projected to last for 4.7 years only since they are made of paper. Coins are being estimated to last for around 30 years, which $4.4 billion may be saved.

“We continue to believe that replacing the note with a coin is likely to provide a financial benefit to the government if the note is eliminated and negative public reaction is effectively managed through stakeholder outreach and public education.” Lorelei St. James, a GAO director, was quoted in a pdf file report.

GAO, a nonpartisan, investigative arm of US Congress has reportedly has been recommending this change for the past 22 years, and will present their latest recommendation report during a hearing before the House Financial Services Committee this Thursday, with St. James hoping that it will now be approved.

Ms. St. James also emphasized that 10 countries, including Canada and the UK, have been successful in replacing low-denomination notes with coins, even if it received negative comments from the public. For US, issues have been raised among the public, the vending machine industry, and the Federal Reserve.

Last year, Louise Roseman, director of Operations and Payment Systems of the US Federal Reserve Bank, wrote a letter to GAO last year, questioning the proposal of the ‘$1 coins to bills’ change, and in doubt as to whether it will really help save money for the US government.

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