The familiar weight of coins and the crinkle of notes, once a constant in daily life, are fading into memory. A silent revolution is underway, reshaping our understanding of commerce and convenience.
Yet, in this transition, one question that strikes at the heart of our financial infrastructure lingers.
The convenience of electronic transactions is undeniable, but amidst this shift, there’s a burning question that’s causing quite a stir:
How much does it actually cost to produce the physical money that’s slowly disappearing from our wallets?
Scott Pape, the financial guru behind The Barefoot Investor, recently embarked on a quest to use only physical currency for a week.
This challenge led him to confront the Royal Australian Mint with a simple yet critical inquiry. Mr Pape, along with many Australians, wanted to know the exact cost of minting coins, especially in an era where their usage is dwindling.
The Royal Australian Mint, however, has been tight-lipped about these figures. This silence has sparked frustration and calls for transparency, particularly from Mr Pape, who is a staunch advocate for the tangible benefits of cash.
He believes that understanding the financial implications of producing coins is essential for the public, especially as we continue to debate the role of cash in our society.
The issue of cost is not trivial. In 2022, the then-Mint chief executive Leigh Gordon admitted that it cost more than 12 cents to produce each 5-cent coin.
Since then, metal prices have risen, potentially increasing production costs even further. Despite repeated attempts to obtain updated figures, Mr Pape and others have been met with a wall of silence.
This lack of transparency is concerning for several reasons. For one, it raises questions about the efficiency and sustainability of continuing to produce coins that may cost more to make than their face value.
It also highlights a broader issue of accountability within government institutions. As Mr Pape pointedly remarked, ‘I don’t appreciate highly paid bureaucrats deciding they’re too important to answer to the people who pay their salaries. This isn’t North Korea.’
The decline in cash usage is evident. The Reserve Bank of Australia’s 2022 Consumer Payments Survey revealed that a mere 13 per cent of transactions were made using cash, a stark contrast to the 60 per cent recorded in 2010.
Yet, despite this trend, there’s a case to be made for maintaining a cash reserve. Sweden, one of the most cashless countries, has recently encouraged its citizens to keep backup cash in case of emergencies or crises.
‘If the Vikings are worried about a digital apocalypse, maybe it’s time to stash a few pineapples under the mattress,’ Mr Pape quipped.
The cost of producing banknotes seems to be more transparent. Note Printing Australia reported that it cost the government $74 million to produce 234 million banknotes in 2020-21, averaging out to roughly 32 cents per note.
Coins, however, are a different matter entirely, with their metal composition and fluctuating raw material costs complicating the picture.
In 2022, the Mint disclosed that it costs around 12 cents to mint each 5-cent piece. Yet, the number of these coins being produced is on a sharp decline, with only 10 million minted last year, down from 49 million in 2022 and 36.7 million in 2021.
The economics of coin production are clearly in flux, with $1 and $2 coins being more cost-efficient to produce than their silver counterparts.
The future of the 5-cent coin has been a topic of debate, with Treasurer Jim Chalmers stating that the production of coins is ‘under constant review’.
An online poll found that while a majority of readers still see the 5-cent coin as useful, a significant minority would not mind seeing it scrapped.
A spokesperson has assured that there are ‘no plans’ to abolish the 5-cent coin, but the final decision rests with the government.
As we ponder our cashless future, it’s crucial that we demand transparency and accountability from the institutions responsible for our currency.
The cost of producing money is not just a financial issue; it’s a matter of public interest that affects us all.
What are your thoughts on the move towards a cashless society? Do you still find value in carrying coins and notes?
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