'U.S. government could save $5.5 billion by replacing $1 notes with $1 coins'

[News_Editor]

'U.S. government could save $5.5 billion by replacing $1 notes with $1 coins'

2011-03-05 02:30:10 GMT+7 (ICT)

WASHINGTON, D.C. (BNO NEWS) -- Replacing the one dollar notes with one dollar coins would save the U.S. government more than five billion dollars over the next 30 years, according to a report released on Friday.

A report released by the U.S. Government Accountability Office (GAO) on Friday showed that the replacement of the $1 note with a $1 coin could save the U.S. government approximately $5.5 billion over about 30 years.

This would amount to an average yearly discounted net benefit of about $184 million. However, GAO's analysis, which assumes a 4-year transition period beginning in 2011, indicates that the benefit would vary over the 30 years.

The government would first incur a net loss in the first 4 years and then realize a net benefit in the remaining years. The early net loss is due in part to the up-front costs to the U.S. Mint of increasing its coin production during the transition, the report said.

GAO's current estimate is lower than its 2000 estimate, which indicated an annual net benefit to the government of $522 million. "This is because some information has changed over time and GAO incorporated some different assumptions in its economic model," the report notes.

For example, the lifespan of the note has increased over the past decade, and GAO assumed a lower ratio of coins to notes needed for replacement. GAO has also noted in past reports that efforts to increase the circulation and public acceptance of the $1 coin have not succeeded, in part, because the $1 note has remained in circulation.

Other countries that have replaced a low-denomination note with a coin, such as Canada and the United Kingdom, stopped producing the note. Officials from both countries told GAO that this step was essential to the success of their transition and that, with no alternative to the note, public resistance dissipated within a few years.

Stakeholders representing a variety of cash-intensive entities in the private sector identified potential shorter- and longer-term effects of a replacement. For example, some stakeholders said that they would initially incur costs to modify equipment and add storage and that later their costs to process and transport coins would go up.

Others, however, such as some transit agencies, have already made the transition and would not incur such initial costs. As in the past, GAO's analysis indicates that replacing the $1 note with a $1 coin would provide a financial benefit to the government if production of the $1 note ceased.

"GAO previously recommended replacement of the $1 note and continues to support this recommendation," the report said. "The Federal Reserve and Treasury reviewed a draft of this report and both noted the importance of societal effects in deciding on such a replacement and offered technical comments."

-- © BNO News All rights reserved 2011-03-05

[Jingthing]

Interesting, but it might have negative unintended consequences for other countries that are dollarized. For example in Ecuador, lots of things cost one dollar, paid in a US paper dollar, if they kill the bills, they'd have to mint a whole lot of coins, as anything not paper is an local coin.

[softgeorge]

Australia did this some 25 or so yrs ago with the 1 dollar and 2 dollar notes for the very same reason. Now walking around with a lot more coins in the pocket. The coins are of no use outside the country as foriegn banks and exchange points will only deal in paper.

[Hawaiian]

Why doesn't the government go after real cost savings like reigning in Medicare fraud that costs an estimated $60 billion a year. Another area of huge cost savings would be tax reform.

The U.S. always like to point to corruption and the accompanying waste in other countries, but refuses to address the problem at home. All we get is a lot of talk and no action.

[koheesti]

I was in the EU a month ago. At one point I had the equivalent of almost $30 worth of coins in my pocket (mostly 2 EUR coins). In America, I would never have more than $1-2 in coins. Much more convenient to have less coins.

I wonder how strippers feel about this idea since they mostly get tipped in $1 bills?

[EnSvenskTiger]

Im for one is waiting for the the five billion dollar bank notes!

Tiger

[flying]

Not like they haven't tried this before

Has never done well

Dollar coins have found little popular acceptance in circulation in the United States since the early 20th century, despite several attempts since 1971 to phase in a coin in place of the one dollar bill.

Although I bet these days a silver dollar would go over well....Sadly as of today it would only weigh less than a gram

[ryladie99]

Why doesn't the government go after real cost savings like reigning in Medicare fraud that costs an estimated $60 billion a year. Another area of huge cost savings would be tax reform.

The U.S. always like to point to corruption and the accompanying waste in other countries, but refuses to address the problem at home. All we get is a lot of talk and no action.

Good news the Attorney General and his team are lining up the American crooks every day and my state Governor also does the same.

America is correcting her problem because, she has no money to go around. The Best that she can do is shutting down all the Army bases around the world with billion of dollars in saving and if she protects America from her own it will cost less. ( 2 out of 5 )

She also cracks down the Medicare fraud as well as 13 million illegal aliens. My state is paying 25 billion for 3 million illegals' Health care. ICE is running up and down the State to catch them. The administration is advocate for Clean air and Green environment. The American are screaming for the products that Made in America and no more imbalance power. Bill Gate and his foundation are running around to improve Science and math in the secondary school around the country. No more outsourcing because, the companies found out that it costs them more to train foreign workers than the American. American has to eliminate her appetite for drugs and I am sure my state will have Drug free policy soon. Think about free marijuana and heroin for life and the drug gangs will need a new career. We are poor because we went to 2 Wars and no one helps. Now if we eliminate Foreign Aids then we save so much money. It is a good humanitarian if the EU steps in. Look at Ex president Mubarak got paid and tugged his 70 billion dollars and now it was frozen by the American Government. Speaking about Corruption you and I experience the mentality of developing country leaders who are corrupted and will eat anything as such stone, rock, dirt and cement. The people are so poor in those countries but, American welfare recipients have televisions, microwaves, dishwashers, washing machines and roofs on their heads. We have the shelters for homeless. but, they prefer to live outdoor and all are mental health patients. Nothing is perfect in my opinion however, I still can see the roads are being built and the towns are growing in America but, I do not see much improving in the developing countries. America still has to have taxes reform for an example the state of California has to abolish proposition 13 so the state can eliminate the deficit. Remember the middle class of 89% taxes payers in America pay for 1% of the Riches and the poor 10% receives benefit from everything no matter what. Feel free to inject if I miss any comment and Please I do not say America is perfect but, when I flip a person in America no one cares I wonder that I can do in the developing countries. My take and personal opinion.

[ryladie99]

Why doesn't the government go after real cost savings like reigning in Medicare fraud that costs an estimated $60 billion a year. Another area of huge cost savings would be tax reform.

The U.S. always like to point to corruption and the accompanying waste in other countries, but refuses to address the problem at home. All we get is a lot of talk and no action.

Good news the Attorney General and his team are lining up the American crooks every day and my state Governor also does the same.

America is correcting her problem because, she has no money to go around. The Best that she can do is shutting down all the Army bases around the world with billion of dollars in saving and if she protects America from her own it will cost less. ( 2 out of 5 )

She also cracks down the Medicare fraud as well as 13 million illegal aliens. My state is paying 25 billion for 3 million illegals' Health care. ICE is running up and down the State to catch them. The administration is advocate for Clean air and Green environment. The American are screaming for the products that Made in America and no more imbalance power. Bill Gate and his foundation are running around to improve Science and math in the secondary school around the country. No more outsourcing because, the companies found out that it costs them more to train foreign workers than the American. American has to eliminate her appetite for drugs and I am sure my state will have Drug free policy soon. Think about free marijuana and heroin for life and the drug gangs will need a new career. We are poor because we went to 2 Wars and no one helps. Now if we eliminate Foreign Aids then we save so much money. It is a good humanitarian if the EU steps in. Look at Ex president Mubarak got paid and tugged his 70 billion dollars and now it was frozen by the American Government. Speaking about Corruption you and I experience the mentality of developing country leaders who are corrupted and will eat anything as such stone, rock, dirt and cement. The people are so poor in those countries but, American welfare recipients have televisions, microwaves, dishwashers, washing machines and roofs on their heads. We have the shelters for homeless. but, they prefer to live outdoor and all are mental health patients. Nothing is perfect in my opinion however, I still can see the roads are being built and the towns are growing in America but, I do not see much improving in the developing countries. America still has to have taxes reform for an example the state of California has to abolish proposition 13 so the state can eliminate the deficit. Remember the middle class of 89% taxes payers in America pay for 1% of the Riches and the poor 10% receives benefit from everything no matter what. Feel free to inject if I miss any comment and Please I do not say America is perfect but, when I flip a person in America no one cares I wonder that I can do in the developing countries. My take and personal opinion.