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  • Ever wondered whether there's a point to having small change?

  • Well, you're not alone.

  • Many governments around the world have asked that very question:

  • Should pennies, the smallest-value coins in circulation, be scrapped?

  • The value of small change is being debated around the globe.

  • Australia phased out one and two cent coins in the 1990s,

  • while Canada stopped producing copper coins in 2012.

  • In the Eurozone, where one and two cent coins are still produced, countries like Ireland

  • are voluntarily rounding prices to the nearest five cents to avoid using smaller change.

  • And even those coins seem quite valuable when compared to currency like Uzbekistan's Tiyin.

  • You would need 8,000 of them to buy just one American penny.

  • Here in the U.K., you can still find plenty of pennies in circulation.

  • To understand why, let's look back at its long history.

  • The wordpennyoriginally meant any sort of coin or money, not just a small denomination.

  • The first English pennies were adopted by Anglo-Saxon kingdoms

  • in the 8th century and were made entirely of silver.

  • That original English penny was worth a lot more than today's penny.

  • That comes down to two main factors: debasement and inflation.

  • Debasement is when a monarch or government lowers the value of currency

  • by changing the makeup of a physical coin.

  • Early coins were made of valuable metals like gold and silver.

  • But as rulers needed more money to pay for things like expensive wars,

  • they began to add cheaper metals into the mix.

  • That made the coins worth less, meaning people needed more of them to buy things.

  • The average price of goods and services has also gone up over time.

  • This is known as inflation.

  • In 2016, the Royal Mint revealed there are 11.3 billion pennies in circulation.

  • But sixty percent of 1 and 2p coins are only used once,

  • lost to piggy banks, sofas, sock drawers, even the garbage bin.

  • Eight percent of pennies are thrown away.

  • This means the Royal Mint has to produce even more pennies to replace

  • the ones that have gone out of circulation - about 550 million a year.

  • However, by law, vendors don't have to accept 1 penny coins

  • as a form of payment for anything over 20p.

  • So this cafe doesn't have to accept these pennies if I want to buy a coffee.

  • Which means there isn't much out there that you can buy with 1 penny coins,

  • apart from some sweets of course.

  • The Royal Mint won't reveal how much it costs to make a penny,

  • nor how much the U.K. would save by stopping production.

  • But it did say that it costs less than 1p to make 1p.

  • That's more than the Americans can say about their penny.

  • While the cost has decreased over the years,

  • it still cost 1.8 cents to produce one U.S. penny in 2017.

  • The cost of a penny largely comes down to the metals in it - and those prices can fluctuate.

  • While the U.S. penny was mostly made of copper for more than 150 years, rising copper prices

  • forced the U.S. Mint to dramatically reduce the amount of copper used in the coin.

  • Now a penny is primarily made up of zinc and is only 2.5% copper.

  • Though ironically now zinc prices are rising too.

  • The British penny is made of steel, coated in copper.

  • Steel prices have also increased over the years,

  • which helps explain why Canada ceased minting its copper coated steel penny back in 2012.

  • For all this effort, the demand for small change is in decline.

  • One study found that Americans throw away $62 million in coins each year,

  • while in Britain, 68% of people don't bother to carry or spend copper coins anymore.

  • One reason for this is the rise in cashless payments.

  • The number of non-cash transactions are projected to hit more than 875 billion by 2021.

  • But don't sign cash's death certificate yet.

  • It's still the most frequent form of payment in the United States,

  • representing 30 percent of consumer transactions.

  • In the U.K., cash accounts for 34% of all payments, second only to debit cards.

  • And globally, 1.7 billion people don't have access to a bank or similar financial institution.

  • So cash is still widely used, but small change isn't.

  • If that's the case, why do we keep it?

  • Is the penny worth more to the economy than we think?

  • Some experts believe that prices ending in 99 are a time-honored sales technique that helps businesses.

  • For example, researchers found that sales of a pizza increased by 15 percent after its price was lowered from €8.00 to €7.99.

  • But pennies can also have a negative effect on businesses and the economy.

  • The U.S. National Association of Convenience Stores calculated that handling

  • pennies adds 2 to 2.5 seconds to each cash transaction.

  • That could cost the economy $10 billion in wasted time every year.

  • And some have argued that charities and their beneficiaries may also lose out.

  • The penny's value - or lack thereof - makes small change useful to charities

  • because people are more open to parting ways with it.

  • Loose change donations to charities in the U.K. alone are worth $396 million a year.

  • As countries like the U.K. and U.S. continue to mint small change, it may only be a matter of time

  • before the penny drops and they follow other major nations in retiring copper coins forever.

  • Hi guys, thanks for watching our video. We hope you enjoyed it.

  • We'd love to know your thoughts on small change and pennies in particular.

  • Do you still use them? Comment below the video to let us know.

  • And remember, don't forget to subscribe.

Ever wondered whether there's a point to having small change?


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B1 中級

なぜペニーがあるのか?| CNBCが解説 (Why do we have the penny? | CNBC Explains)

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    Taka に公開 2021 年 01 月 14 日