A tale of two monetary systems

A year ago, I wrote about how 2012 was going to see some dramatic changes in Canadian money. Looking back, I think we can agree that it was an understatement. Polymer notes are now in circulation, as I expected, and the new $1 and $2 coins are now in circulation, as I expected. The circulating commemorative program for the War of 1812 is doing well, and even includes a few colourized coins. But there have been a few surprises. I did not expect that the 1-cent coin would be on its way out the door this fast, or that the last coin would be struck in 2012.

If I had thought about it, I would have figured out that the new $1 and $2 coins would prompt the withdrawal of the older coins from use, because of the slightly different specifications. However, I didn’t see that coming, and certainly didn’t expect the move to be as dramatic as it has been. In just a few months, older composition coins have become scarce. When we look at all the other changes that have led up to 2013 since the introduction of tri-plated circulating coins more than a decade ago, the total change to our coins is pretty dramatic. By the end of this year, all of our notes will be printed on polymer, and “paper” money will be fast vanishing, the 1-cent coin will be gone, and virtually all of our coins will be less than 15 years old.

I can’t think of a time since the days of Queen Victoria when our physical money underwent such a dramatic change. This is bigger than the switch from the large cent, bigger than the introduction of the loonie and toonie, and even bigger than the switch away from silver to base metal. This could be considered an entire recreation of this country’s currency, something that hasn’t happened since before Canada was a nation. Astute readers will notice that I use the word currency in the Canadian sense, which means coins and notes. Please don’t write to me saying that currency only means banknotes.

So far the big beneficiary of this change has been the Royal Canadian Mint. Our favourite Crown corporation has been tasked with culling out the old money, as well as replacing it with new coins. The Mint doesn’t make huge profits on Canadian circulating coins, and does pay back dividends to the government, so we shouldn’t be jealous. While all of this is happening, our neighbours to the south are struggling to get their heads around the idea of currency reform. They are stuck with an inefficient $1 note, and with low-value coins that cost more to make than face value, yet they seem unable to fix the problem. The reason, of course, is that their system is politically driven rather than pragmatic.

Every step along the way requires extensive review and debate by politicians, often with an axe to grind. Fans of the $1 note have even created some interesting math to imply that coins are not as efficient; a mental exercise that reminds me of Ptolemaic astronomers tweaking their concepts to prove that the planets revolved around the Earth rather than the sun. Even the United States Mint, which certainly knows the business of making coins, seems afraid to actually recommend a change in metallic composition for low-value coins, and instead makes weak-hearted suggestions. The end result is that, as our money surges forward to keep up with new technology, Americans are still working with their grandparents’ money.

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