To produce a $1 coin, it costs the United States Mint approximately 30 cents, giving them a 70 cent value after being sold for a dollar to Americans and lasting about 30 years, CNN reported. The profit, or seigniorage, could provide the government about $4.4 billion over the course of three decades, according to the Government Accountability Office (GAO), if $1 coins replaced paper dollar bills.
The production of a $1 bill is initially less expensive, according to CNN, costing only 5 cents to make the bill. However, paper bills typically last only 4.7 years, and over time $1 coins, which last longer, would save the government money as a result of their durability.
The issue will be brought up today before the House Financial Services Committee . The proposal for a bills to coins switch has been proposed numerous times over the past 22 years, but GAC officials remain determined to keep $1 paper bills in circulation.
Lorelei St. James, a director at the nonpartisan GAO, is preparing to plead the organization’s case on moving from paper bills to coins at the congressional meeting today. “We continue to believe that the government would receive a financial benefit from making the replacement,” the financial expert said in an official statement.
St. James notes that countries like Canada and the U.K., among others that have replaced their low-denomination currencies with coins, have seen financial success in the process, despite any unpopularity with the change. The statement also brings up the wear and tear of dollar bills due to the constant exchange of lower-valued currency, which would be solved with more durable coins.
The GAC’s main obstacles to the conversion are an unsupportive public, along with vending machine companies and the Federal Reserve. CNN notes that the Fed had $1.4 billion in $1 coins in its vault as of May due to low demand.
Louise Roseman, the director of the Federal Reserve Bank's operations and payment systems, wrote a letter to the GAO last year inquiring if $1 bills to $1 coins would be beneficial to the country. The Fed director claims that seigniorage is "revenue transfer from the private sector to the government," so it wouldn’t have any effect on consumers, banks retailers or even the Fed.
CNN notes that the majority of $1 coins in circulation are to appease the demand created by collectors.