Recently, six bills have been introduced in Congress to address a seemingly urgent issue before our nation: our growing stockpile of $1 coins.
Technically, the issue is not just the $1.2 billion in dollar coins being held in storage at Federal Reserve banks. Media reports have pointed out that the government has wasted millions to produce coins that nobody wants. (Last year, just over $400 million in dollar coins was produced.) A Federal Reserve Bank board of governors report published in June cited the projected cost of $650,000 to create a storage facility for the coins and an additional $3 million to transport the coins to the facility.
The buildup in unneeded coinage is a result of very specific language in the Presidential $1 Coin Act and the Native American $1 Coin Act, combined with the virtual absence of transactional demand for dollar coins. Federal Reserve banks are required to ensure that each newly designed presidential dollar coin is made available to depository institutions during an introductory period. To meet this requirement, they order large quantities of the four designs released each year. When the coins remain unordered or are eventually returned to the reserve banks, the coin stockpile continues to grow.
Meanwhile, the U.S. Mint is required to strike a Native American coin design each year in a quantity of at least 20 percent of all dollar coins.
The six bills introduced in Congress offer a variety of solutions. Some would remove the introductory-period requirement that compels reserve banks to keep ordering the coins. Two of the bills would strike the entire section of the 2005 law authorizing presidential dollar coins, which would necessitate an immediate end to the sequential parade of former presidents. (Sorry, Warren G. Harding.)
Others would suspend the presidential dollar coin series until the Treasury secretary determines that the existing surplus no longer exceeds the needs of circulation or for a stated 15-year period. In short, Congress has authorized the production of dollar coins and now seeks to suspend or curtail the same programs.
The elephant in the room, meanwhile, has been the $1 bank note. As long as the two forms of currency for the same denomination exist, the dollar coin will end up the casualty. Clearly a choice should be made for the coin or the note.
When faced with the same dilemma, most countries have opted to eliminate low-denomination notes. In the past 47 years, countries doing this include Australia, Canada, France, Japan, the Netherlands, Russia, Spain and Britain. The Government Accountability Office has recommended five times in the past 20 years that the dollar bill should be replaced with a coin. The most recent report, published in March, indicated a savings of $5.5 billion over 30 years.
If Washington is serious about seeking savings, why not join the rest of the world and make the switch? With a ready stockpile of dollar coins, the timing seems opportune.
Michael Zielinski is the author of Mint News Blog.
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