US government to stop making pennies after more than 200 years

Beginning next year, the widely used one-cent coins will cease to be circulated. After maintaining the penny for over two centuries, the US government has finally decided to phase it out, reports the Wall Street Journal.

The Treasury Department has announced it will halt the production and distribution of new pennies by early next year to address a persistent shortage affecting cash transactions.

A Treasury spokesperson confirmed that businesses are expected to adjust by rounding prices to the nearest nickel. Producing a single penny costs over four cents, resulting in an $85 million loss for the Treasury last year.

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With the elimination of the penny, the Treasury expects immediate budget benefits but also recognizes potential issues with the nickel. Rhett Jeppson, ex-chief of the U.S. Mint, told the New York Times that the end of the penny could inadvertently drive up demand for nickels.

"You lose more on a nickel than you do on a penny," said Jeppson.

Despite their five-cent denomination, nickels have become another source of loss for the Treasury, contributing to an $18 million deficit from their production last year.

The problem could escalate with the phasing out of the penny, as the demand for nickels is expected to surge significantly in its place.

Given that the Treasury incurs a larger loss on nickels—around 14 cents each to manufacture—ramping up production to meet demand could quickly negate any financial gains from discontinuing the penny.

The move to cease penny production follows years of bipartisan efforts to ban the coins. Former President Barack Obama criticized the penny during his time in the White House.

In a social media post this February, President Trump called on the Treasury to stop producing pennies, labeling them "wasteful."

"For far too long, the United States has minted pennies which literally cost us more than 2 cents," he posted.

"Let's rip the waste out of our great nation's budget, even if it's a penny at a time."

Furthermore, the Treasury told the WSJ that this month, they placed the final order of blank templates needed to produce pennies.