US Treasury gives final decisions on pennies…. and it creates a new problem

One cent coins will stop entering circulation next year, according to reports. 

After more than two centuries the US government has finally decided to kill the penny, the Wall Street Journal reported. 

The Treasury Department will stop minting new pennies and putting them in to circulation by early next year.

Soon there will not be enough pennies in circulation to fulfil cash transactions.

As a result businesses will have to round up or round down their prices to the nearest five cents, a Treasury spokesperson told the publication. 

The penny currently costs more than four times its value to make and the Treasury lost $85 million minting the coins last year alone. 

The phasing out of the penny may save the Treasury some immediate cash but it raises the next currency problem, that of the nickel. 

‘If you get rid of the penny, it will increase the amount of nickels,’ Rhett Jeppson, a former chief executive of the U.S. Mint told the New York Times. 

Businesses will soon have to round up or round down their prices to the nearest five cents

The mint will stop circulating new pennies next year, according to reports 

‘You lose more on a nickel than you do on a penny,’ Jeppson explained. 

Nickels, worth five cents, are also a loss-maker for the treasury, leaving an $18 million hole from their production last year. 

The problem could be exasperated by the end of the penny because demand for nickels is likely to shoot up in their place. 

Since the Treasury loses more per coin on nickels – they cost around 14 cents to make – an increase in their production to meet demand could soon outweigh any savings made by axing the penny. 

The decision to stop making pennies comes after years of bipartisan efforts to eradicate the coins. 

President Obama was critical of the penny during his time in the White House. 

Most recently President Trump asked the Treasury to halt penny production in a social media post in February.  

The final order of blank templates needed to make pennies was ordered this month, the Treasury told the Journal. 

The production of nickels is also a loss-maker for the Treasury 

After that minting will stop and the final pennies will be moved in to circulation. 

Although cash transactions will have to round up or down non-cash transactions can continue to be priced at exact change, the Journal reported.  

Since many states have a sales tax that specifies taxes must be rounded to the nearest cent the Treasury has asked state and local governors to provide guidance to businesses to ensure taxes are collected properly.