Mint Director Edmund Moy (right) and Director of the Federal Reserve's Division of Reserve Bank Operations and Payment Systems Louise Roseman (left) unveiled the designs of the presidential series of $1 coins during a ceremony at the Smithsonian National Portrait Gallery Nov. "I might actually make some phone calls myself as a result of reading these reports and learning more about what this problem appears to be." "It's ridiculous to have this kind of over-inventory pile up," he says. The Federal Reserve Board cautioned that coin inventories and storage costs would increase.Ĭastle says the coins should continue to be produced, but in smaller numbers. When Congress was considering the law, the Congressional Budget Office warned that there would be low demand for the coins. "It's not quite like cutting somebody's Social Security," Castle says, "but politically it's not something the members want to deal with, so it's just very hard to get something like that done." But he says that mandating a wholesale switch from bills to coins was politically untenable then, as it is now. And, it could accelerate a technological trend toward payments with mobile devices.ĭelaware's Castle, who left Congress after a primary loss and now practices law, acknowledges that the demand for golden dollars didn't materialize as he had hoped.Ĭastle says he and others knew when they were passing the bill that widespread adoption of dollar coins would be hindered by the continuing production of dollar bills. That's because people handle coins differently than they do bills.Įven if all dollar bills were replaced with coins, some say the nation's evident distaste for dollar coins will simply mean more small transactions will be done electronically. So, in other words, a tax? The profit to the government predicted by the GAO assumes that the government would have to issue 1.5 dollar coins for every dollar bill removed from circulation. The reason, says Roseman, director of the Fed's Division of Reserve Bank Operations and Payment Systems, is that seigniorage "is a revenue transfer from the private sector to the government." The Fed's Louise Roseman wrote to the GAO that seigniorage should not be considered in an analysis of whether the switch would benefit the larger U.S. When this profit, known as seigniorage, is factored out, switching to the dollar coin would actually cost taxpayers money over three decades, according to a Federal Reserve analysis of the GAO's figures. Instead, the benefit to the government would come only from the profit it makes by manufacturing each coin for 30 cents and selling it to the public for a dollar. The report says the government would not recover the cost of switching from bills to coins over that period. Whether taxpayers would benefit is another matter.Ī Government Accountability Office study out this spring says that switching to a dollar coin "would provide a net benefit to the government" of about $5.5 billion over 30 years.īut it's not because coins are cheaper. A coin could last 30 years, but a new dollar bill will be ready for the shredder in less than four years.īut if moving exclusively to dollar coins would save money, the question is, whose money? Certainly, issuing the coins and having them circulate, rather than sit in vaults, would create a source of revenue for the government. Paige and other dollar-coin advocates point out that coins last longer than bills, and that's why they save money. You may have heard that dollar coins are more cost-effective than dollar bills. "They use them for meters and all kinds of other things, so I certainly think Americans can adapt." "The idea that, 'Oh, I don't want them jingling in my pocket,' I mean, I don't know, most people carry quarters with them," Paige says. "I think Americans will definitely embrace the dollar coin if they're just given the opportunity," she says.Īs for the Harris Poll showing Americans don't want dollar coins, Paige says, "I suspect that they just don't understand what the up sides are," including the fact that coins don't need to be disposed of as bills are. Leslie Paige, who represents watchdog group Citizens Against Government Waste, says the government should withdraw the dollar bill from the market and force Americans to use the coins. Still, dollar coin proponents, including some advocacy groups and vending-based industries, are undeterred. Credit: Robert Benincasa, Christina Baird, Nelson Hsu
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