As the Penny Ends, Dave Smith Explores the Nickel's Uncertain Future

The U.S. Mint pressed its final pennies this week, and according to CNN and insights from David Smith, Senior Associate Provost and faculty member at Pepperdine Graziadio, the nickel may not be far behind. Production costs for both coins now exceed their face value, with the nickel losing nearly 9 cents per coin due to high copper and nickel prices.

Efforts are underway to redesign the nickel using cheaper materials, but reducing production costs is only part of the challenge. Americans are relying less on cash, which continues to diminish the usefulness of small-denomination coins. Other countries, including New Zealand and Australia, eliminated their nickels within two decades of phasing out their pennies.

Smith, an avid coin collector, believes nostalgia may slow the process but will not ultimately prevent change. He notes that while people may feel attached to traditional coins, the nickel's long-term future remains uncertain and likely limited.

Advocates also warn that reducing or eliminating coins entirely could create challenges for lower-income consumers and small businesses that depend on cash transactions. Credit card processing fees often shift costs back to shoppers, raising concerns about the broader implications of a cashless economy.

Though the penny has officially reached its end, Smith and other analysts suggest that any move to discontinue the nickel will take time. The Mint has operated at a loss on both coins since 2006, but meaningful change will not happen overnight.

Read the full article here.