Despite the unpopularity of $1 coins with the public, believe it or not, there are some consumer groups that are still trying to pressure the Federal Government to circulate more—many more $1 coins. Groups like Citizens Against Government Waste, are getting very aggressive in there efforts to push the Federal Reserve into distributing more $1 coins.
This group claims that the savings of switching to the $1 coins would be substantial over the current use of paper money. They claim that the coins would last longer than paper money, which is of course true. But will the Public and the Federal Government play ball?
It’s not like the U.S. Government hasn’t been trying to circulate $1 coins. Over the years they have introduced the Eisenhower dollar, the Susan B Anthony dollar, the Sacagawea dollar, and a new series of $1 coins featuring past U.S. Presidents. Unfortunately for the Government, the $1 coins have never been very popular with the Public for general circulation.
The Director of the Reserve Bank Operations at the Federal Reserve told the U.S. House of Representatives Financial Services Sub-Committee recently that the government is minting more $1 coins for circulation. The director claimed that total demand for the $1 coins has nearly tripled since 2006.
Of course, it is unclear what portion of this increased demand is for transactional versus collector purposes, or if there will really be a serious Public demand for $1 coins. What is clear is the Legislative requirements associated with $1 coins. These requirements have resulted in a steadily rising Reserve Bank inventory of dollar coins with the attendant costs of storing and handling them. The consumer and advocacy groups are trying to strike while the iron is hot.
The group, Citizens Against Government Waste sent a letter to U.S. Treasury Secretary Tim Geithner urging the Government to “aggressively increase” the circulation of the $1 coin. It is the CAGW’s view that the U.S. Treasury Department and the Federal Reserve are not interested enough in pushing for the general use of $1 coins.
The advantage of using $1 coins is substantial according to CAGW. They point to a Government Accounting Office report that indicates that the use of dollar coins would save taxpayers $522.2 million per year. The group contends that the coins are more durable than paper currency.
The Bureau of Engraving and Printing produces approximately 3.4 billion $1 bills each year, each of which costs 4.2 cents to produce. Each dollar bill has a life expectancy of about 21 months. On the other hand, the $1 coin costs a bit more to produce—12 to 20 cents—but has a lifespan of 30 years or more.
CAGW claims that taxpayers would be on board for a shift from paper currency to coin currency in $1 denominations. They believe that the $500 million per year savings will appeal to consumers too.
Congress is open to the idea, as well. Congress passed a bill that would make the $1 coin as commonplace a one dollar bills. CAGW contends that the Federal Reserve is dragging its feet by “erecting barriers” to block access to the $1 coins by banks, businesses, and consumers.
Of course, nobody has consulted with the public at large. There may be an increased demand for $1 coins by collectors. However, it remains to be seen whether the Public at large is ready to switch to the use of $1 coins.
Consumers are creatures of habit. They are very comfortable using paper currency. They are not in the mindset to use dollar coins in place of paper dollar bills. Coins are heavier than their paper counterparts are. Does anyone really want to walk around with a pocket full of heavy coins? I do not!