What the death of the penny teaches us about the future of money

A decade later, Canada could be on the cusp of a far more radical shift in payments, as policymakers talk openly about the possibility of all physical money going the way of the copper coin. If that happens, lessons from the demise of the penny could help smooth the transition. Killing off a coin that most people have stopped using sounds simple, but it isn’t.

The central bank’s senior deputy governor, Carolyn Rogers, echoed this sentiment this week, saying that while the shift to digital payments is largely demographic, she could nonetheless see Canadians giving up cash altogether. “We can foresee a future where there is only digital currency, that’s possible,” Rogers said in an interview on May 3. “So, there ought to be a digital Canadian dollar in that case, and so that’s what we’re working on.

“You need to have that view into where and you need that possibility to move them around to be able to make sure that people access coins and that we do it in a responsible and efficient manner,” she said.But before the penny became a case study in how the Mint will help usher in a world of digital payments, the coin had its own vibrant history that shows why some may have been reluctant to see it go.

After the penny left Canadian circulation, it changed payments countrywide, as transactions were rounded up or down to the nearest five-cent level. It also evolved the Mint’s coin-management system.Lemay said it was because of Canada’s unique approach to coin management that allowed for the removal of billions of coins from circulation relatively painlessly.

More than 7.4 billion coins have been redeemed to date, the bulk of which had been brought in during the first three years after the coin was taken out of circulation.Photo by Gord Waldner/Postmedia Network files

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