In a move that could save the government more than $5.5 billion, the Government Accountability Office recommended the U.S. switch its $1 currency from paper bills to dollar coins. The GAO based this recommendation on data from the Board of Governors of the Federal Reserve System, the Bureau of Engraving and Printing and the United States Mint.
Lorelei St. James, GAO’s director of physical infrastructure issues, spoke to the Federal Drive with Tom Temin and Amy Morris about GAO’s plan to replace the dollar bill, how prepared the Mint is to handle coin production and the costs and benefits of switching to dollar coins.
St. James acknowledged that the U.S. Mint would experience some start-up costs in switching over to coin production, with the government facing a net-loss in the first four years before beginning to see the benefits of the switch.
“Coins are more durable than notes, and they don’t need to be replaced as often,” St. James said. Other countries, such as Norway, the United Kingdom, Canada and Australia, made the switch in the 1980s and have seen cost savings.
This isn’t the first time that the U.S. has considered switching to dollar coins. St. James conceded the public hasn’t warmed to the idea in the past.
“A lot of people don’t want to carry a lot of dollar coins with them,” she said. “They’re heavy. And, some industries which are cash intensive would actually have to have new equipment.” For example, she said, armored car companies might end up spending more on fuel because the coins would be heavier to carry.
“If you even go outside of the government, there are going to be winners and losers in terms of who has a vested interest in the dollar coin and who has a vested interest in the dollar note,” St. James said. “It’s not a decision that GAO would make. It really lies with congressional policymakers.”
For the switchover to be successful, St. James said that the dollar note would have to be removed from circulation. “That’s what the U.K. and Canada had to do,” she said.
Tom Temin is the host of The Federal Drive, which airs from 6-9 a.m. on 1500 AM in the Washington, DC region and online everywhere. Tom has 30 years experience in journalism, mostly in technology markets. Before coming to Federal News Radio, he was a long-serving editor-in-chief of Government Computer News and Washington Technology magazines.