The Canadian government will introduce a composition change for their $1 and $2 coins, known respectively as the ‘loonie’ and ‘toonie’, in the March-April 2012 timeframe in order to save money in their production and distribution, as well as make them more difficult to counterfeit. The change was announced in the 2011 federal budget, but did not receive a final approval from the Cabinet until last month.
As reported in The Globe and Mail, the change will remove the nickel from the loonie, which is currently made from bronze-plated nickel, and the toonie, which has a ring of pure nickel around a copper-alloyed center, and use the same plated-steel composition currently used for their penny, nickel, dime, and quarter. The new coins will weigh slightly less, which should not be noticeable to the public, but when aggregated by the truck load, the reduction in weight will result in considerable fuel savings. The costs of manufacturing the coins will also be reduced, from the current 30 cents per coin to an average of 5 cents, thus increasing the seigniorage for the Canadian government.
This change will not come without some costs, as coin operated industries will need to spend approximately $40 million to alter their mechanisms to properly detect the updated coins. Bringing them on board delayed the process, but doing so provided a smoother transition.
The changes in the prices of base metals, including nickel and copper, have been a pain point for many governments; nickel has swung from under USD $8 to over $13 in 2011, and was a contributing factor in this decision. The United States government has also been examining this situation, but has not yet arrived at any conclusions nor has announced any plans to alter its coin compositions.