The nickel is running out of time, and relevance

By Bret Evans

The recent Desjardins report does not mean the immediate end of the nickel, but it certainly is an indicator of what lies ahead.

We can’t forget that the first sign the humble penny was on the way out was a similar report from the same organization. The Royal Canadian Mint doesn’t have to follow Desjardins’ suggestions, but they certainly pay attention.

There is no doubt that, having gone through the experience of eliminating the cent, Canadians would not kick up much fuss about losing the nickel. We have come to accept that rounding off doesn’t really cost us money in the long run, and we didn’t see a noticeable increase in any costs.

There is also no doubt that our current smallest value coin has very little purchasing power.

However, there remain two very big differences, and those are probably the reasons why the Desjardins report suggested a five-year timeline.

So far, and this is probably the most important to both the Mint and the Government of Canada, the nickel makes money for Ottawa. One of the key reasons the cent got killed was because it had an estimated cost to the economy of 1.7 cents for each coin minted. That included the cost of production, storage, distribution, and actually handling the coin. It is hard to support a coin when the more you make the more money you lose.

Secondly, the nickel still has some respect. The penny had become a problem. People hated handling them, left them on store counters, and wouldn’t even stop to pick one up off the street. To some extent that is true of the nickel, but not totally. In other words, the penny was an inconvenience; the nickel is simply an annoyance.

To me, this report is not the definitive answer, but the opening shots of an ongoing battle do make the 10-cent piece our smallest coin. It is a battle the nickel is bound to lose, if only because inflation alone will render it useless and expensive.

The other recommendations in the report are a little less likely.

I agree we are a long way from a cashless society. For years I have maintained that the underground economy will continue to function, using bitcoins, foreign money, or even bullion. What’s more, like many Canadians I value my privacy and resent the idea that big brother could be looking over my shoulder.

I really don’t think Canada is ready for a $5 coin at this time. Inevitably it will happen, again when the lower net cost of a coin in our pocket makes economic and social sense compared to the convenience of folding money in our wallets.

I also wonder how successful a coinage reform that would see 10-, 20-, and 50-cent coins take the place of the existing five-, 10-, and 25-cent pieces. It makes sense logically, but I just don’t think our brains work that way. If they did, the 50-cent piece would be in use already instead of being the most invisible coin in the circulating family.

During the investigation into eliminating the cent, I was called to the Senate Finance Committee where a group of senators grilled me about eliminating the one-cent piece. As a numismatic editor they kind of hoped that I would find some compelling reason to support the coin.

The reality was that I couldn’t find a logical defence, just an emotional attachment.

What’s more, Steve Woodland, who attended the same hearing as an RCNA (Royal Canadian Numismatic Association) representative, came to the same conclusions.

I will admit that Steve and I had dinner together before the hearing, but we prepared our presentations independently. The truth is that while we both wanted to keep the coin, we just couldn’t justify the existence of a one-cent piece in our society today.

I suspect, that five or maybe 10 years from now, the same will be said about the nickel.

The Desjardins report is bullish on coin reform, and seems to be quite in favour of getting rid of circulating money altogether.

But as the report itself concluded, the opinions of the Canadian public should be what matters. I suspect that by 2025, most of us won’t shed a tear when the nickel is finally put to rest.

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