Donald Trump says we’re dumping the penny — but how will that work? Countries that have eliminated their lowest-denomination coins, like the penny, typically follow a phased approach to minimize disruption. Governments first stop minting the coin, as seen in Canada in 2012 and Australia in 1992. Cash transactions are rounded to the nearest five cents using “Swedish rounding.” This ensures smooth transitions without affecting electronic transactions, which continue to record prices to the nearest cent. For example, Canada implemented this rounding system when it phased out its penny.
In some cases, like Australia, the coins remain legal tender indefinitely, allowing people to use or deposit them until they naturally phase out of circulation. Governments often run campaigns to educate the public and retailers about rounding rules and encourage acceptance of the changes. Canada and New Zealand both emphasized public education during their transitions. Existing coins are gradually withdrawn from circulation through banks and retailers and are eventually melted down for recycling.
This is not a new discussion. Here's a report on The Today Show from 2021.
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