The change in your pocket might soon get a makeover.
As the cost of metals have risen in the last decade, it’s become prohibitively expensive for the U.S. Mint to keep churning out coins in their current iteration. (Fun fact: It costs more to produce pennies and nickels than the coins are worth at face value).
In a new report, the Government Accountability Office estimates the cost of redesigning nickels and dimes, replacing the metals they’re currently fashioned with (a combination of copper and nickel) with one of four cheaper options proposed by the U.S. Mint in 2014 — a new version of the current copper/nickel combo, nickel-plated steel, layered plated steel, or stainless steel. The changes could save the U.S. Mint between $8 million and $39 million a year, the GAO estimates.
The quarter won’t get a steel makeover because it would make it too easy for fraudsters to pass off foreign coins as quarters. Coin machines determine coin value by weight, and steel-based quarters may put their weight very close to that of foreign coins with a lower value, the GAO says. Since pennies are already made with the cheapest metal (zinc), the best way to save at this point is just to get rid of them, an idea many support. Canada stopped producing its penny in 2012 because of rising costs.
As it stands, the Treasury pockets the profits from coin sales to banks and other financial institutions and uses that cash to help reduce government deficit. An extra $39 million a year certainly wouldn’t hurt, but with the current deficit at $439 billion it won’t exactly put us in the black. Still, the GAO’s proposal might be enough to get Congress’ attention. The Federal Reserve is charged with deciding how many coins to produce to meet demand. The Mint manufactures the coins (13 billion in 2014, up from 5 billion in 2010, according to the GAO). Congress gets to decide what those coins are made of.
There’s at least one group that won’t be so supportive of the GAO’s ideas — businesses that will have to pay to replace or upgrade their current coin machines to ones that can read new coin compositions. In 2016, millions of amusement parks, arcades, laundromats, vending machines and parking meters still rely on coin-operated machines to function.
When the U.S. Mint asked a half dozen industry associations to estimate how much it might cost to upgrade machines to handle new coins (at a cost of about $100 per machine), they projected between $2.4 billion and $10 billion based on an estimate of 21.9 million coin machines. The GAO, however, says the figures may be inflated for a number of reasons. For starters, those estimates were based on changes in quarters, which the GAO and Mint have concluded will not change. It also doesn’t account for many vending and parking meter machines that will be replaced by coinless models, which is a growing trend.
So how soon could new coins roll out? Don’t hold your breath. The Mint is set to release a new report on the cost of coin production in December 2016 and has yet to make official recommendations of its own to lawmakers, who have the final say on whether to change the metals in coins.