Canadian Coin and Banknote Reform from 1987 to the Near Future

Mitchell Fridman

Canadians, more than most, love their money. How could we not, with our wallets constantly full of brightly coloured notes of brown, red, green, purple and blues and pockets full of jangling toonies, loonies, quarters, dimes, nickels and pennies? The question then becomes, how do we keep our monetary system working properly while inflation constantly diminishes the value of the money in our pockets; well coin reform is the most obvious way. I will discuss the uniqueness of our coinage via the differences between it and the American monetary system while showing the advantages of our coins and presenting three changes that are likely to come about in the next decade.

As much as Americans like to comment on our banknotes looking like Monopoly money, then beginning to insert colours into their notes in the last couple of years, our system has certain advantages over theirs. For one, the bright colours make looking through our pocketbooks not only more fun, but also easier as we don't have to rifle through the individual bills to find the denomination we are looking for. We also have one less bill since 1987 and the introduction of the loonie, or one dollar coin. This change, was not just welcomed by duck enthusiasts, but also by the Canadian taxpayers as the Bank of Canada released a study from 1994 saying that the government saved $487 million dollars in the first 5 years of the one-dollar coin as they last significantly longer than bills. Though introduced in 1987, the printing of the $1 bill did not cease until 1989 to ensure the successful adoption of the loonie (2007: A1).

The year 1996 brought to Canada our next monetary reform with the introduction of the two-dollar coin, or toonie, at the expense of the robins on its banknote counterpart. This shift was met with less love than the loonie as there were some problems with early toonie production where there was a high rate of the centers popping out and early complaints of another coin in our purses, but soon enough these problems were dealt with both mechanically and practically and the new coins were accepted by everybody. Though discontinued in the late 80's and 90's respectively, according to the CBC, there were still more copies of one-dollar and two-dollar bills either in circulation or in personal collections than ten-dollar bills in circulation at the end of 2006. The two-dollar unit is currently the greatest difference between the Canadian and American monetary systems as both have this unit, but the American two-dollar bill is not only the least made in banknote in the country, it's so scarce that many Americans don't even know they are still in circulation while our toonies are used extremely often (2007: CBC).

The most recent change to Canadian banknote policy came in 2000 when production of the thousand-dollar bill was ceased (2000: Bank of Canada). Though there were never that many in circulation, the thousand-dollar bill was mostly used to launder money or for other illegal or disreputable activities, thus the recommendation from government agencies and police forces to discontinue its production. The United States had a circulated thousand-dollar bill as well as a couple of other large denomination banknotes ($500, $5,000, $10,000, and $100,000), but they were last printed in 1945 and taken out of circulation in 1969. This brings us to the first of three potential changes coming to Canadian currency in the next decade or so, being the introduction of a new large denomination bill with a value of $200.

The $200 bill will help to alleviate inflation issues and be useful for people who carry large sums of cash on them while not being nearly as convenient as $1000 bills to launder money and perform other activities of ill-repute. Along with the introduction of the $200 bill, there is another inflation based problem in our monetary system, this time on the opposite end of the scale; the humble penny. The penny has been a staple of our monetary system since 1858, but with less and less people using pennies and the cost to create them being more than their face value it's easy to see the arguments in favour of abolishing the coin (2007: A1).

The final change likely to come for our monetary system is another switch from bill to coin, this time at the five-dollar denomination. Without looking too much into the specifics, I think this is another good, inevitable change for us as it will save the government hundreds of millions of dollars in production costs, much like the article cited earlier relating to the loonies, and will be another minimal increase to the coins in our pockets, especially if we also eliminate the penny at the same time (2007: A1).

As for the States, they will likely not make the same changes as Canada, with the exception of the elimination of the penny as they certainly did not embrace their trial with one-dollar coins. Though there are still many in circulation which are mostly given as change from vending machines, dollar bills remain much more popular than coins by most Americans, though it did get widely adopted in Ecuador who uses the United Stated Dollar as their currency (2006: 114).

It's hard to say for sure what is coming in Canada's future but I believe that the following changes, which are both likely and beneficial to our society and our taxpayers, will all be implemented within the next 10 - 15 years as suggested by prominent economists. These changes will once again differentiate our society from our neighbours in the south in an obviously superficial and harmless way while providing us with useful and appropriate bills and coins for our everyday life.

Bibliography

Bank of Canada
2008 Bank of Canada to Stop Issuing $1000 Note. http://www.bankofcanada.ca/2000/05/press-releases/bank-canada-stop-issuing-1000-note/?page_moved=1, accessed May 6^th, 2011

Branswell, Jack
2007 $5 coin might join loonie and toonie; Ottawa studies replacing bill. Montreal Gazette, November 5: A1

CBC News
2007 Money, Money, Money: Canadian paper currency in circulation. http://www.cbc.ca/news/interactives/map-cdnbillscirculation/, accessed May 6^th, 2010

Sanders, Mitch
2006 Modern Dollar Coins. http://money.org/AM/Template.cfm?Section=Home&CONTENTID=6241&TEMPLATE=/CM/ContentDisplay.cfm, accessed May 13^th, 2010

Image source: Flickr.