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Canada Says Goodbye to Pennies

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Last month, we talked about a small note in Obama’s budget that called for the use of more “cost-effective” materials when minting coins. Currently, lower denomination coins are made at loss: Pennies cost 2.4 cents, nickels 11.2.

Of course, the most cost-effective way to mint pennies would be to not mint pennies. Unfortunately, it doesn’t look like the government has any plans in that direction.

Up north, however, it’s another story. Canada plans to pull the penny from circulation this year, the Atlantic reports.

The Royal Canadian Mint will stop minting pennies this fall, due to the coins low purchasing power and general uselessness. Bloomberg quotes Canadian Finance Minister Jim Flaherty saying, “Pennies take up too much space on our dressers at home” and “they take up far too much time for small businesses trying to grow and create jobs.”

Businesses will continue to take the penny as it is removed from circulation. Future cash transactions will be rounded to the nearest nickel, although non-cash payments will still round to the penny.

The Canadian government anticipates savings of $11 million annually on minting the coins. Financial institutions may also save as much as $20 million thanks to reduced transportation and storage costs.

And bear in mind, the Canadian penny costs substantially less per unit than ours: 1.6 cents to 2.4.

Government officials, sounding eerily similar to commenters in the states, called the move “a long time coming.”

Still, Canadian penny or no Canadian penny, the world is a long way away from going completely cash free. That said, one technology moving society in that direction got a new look earlier this week.

According to the New York Times Bits Blog, the Square app for Android (GOOG) and iPhone (AAPL) was recently updated, making it more attractive and adding a few new features. Most impressive is a new feature that allows consumers to buy items by walking up to a merchant and saying their name.

Sounds like a good way around cash.
POSITION:  No positions in stocks mentioned.