WASHINGTON — Changing the metal composition of quarters is not a viable alternative because doing so would increase the potential for fraud, according to a new report from the U.S. Government Accountability Office (GAO).
Several years ago, metal prices rose to the point where the unit costs of a penny and nickel exceeded their face value. In other words, it cost more to produce a penny or a nickel than the currency value it held. The U.S. Mint was directed by statute to develop and evaluate the use of new metals that would reduce the costs of coin production while minimizing the impact on coin-accepting equipment.
Treasury is authorized to recommend coin changes to Congress based on U.S. Mint’s analysis, but has not yet done so. GAO was asked by “congressional requesters” to examine the Mint’s efforts.
The U.S. Mint estimates that the government could save between $8 million and $39 million per year by changing the metal composition of the nickel, dime and quarter. But it has determined that it is not viable to change the quarter because less valuable foreign coins would have similar characteristics to a steel quarter and could then be used as counterfeit quarters.
Associations representing selected industries that use coin acceptance machines estimated a cost impact ranging from $2.4 billion to $10 billion to modify an estimated 22 million coin machines, such as vending machines, to accommodate steel-based coins, the GAO report says.
But the GAO found the estimates may be overstated for several reasons. The vending industry assumed 7 million vending machines would require modification, but a 2015 industry study estimated there are 4.5 million vending machines in the United States. Also, the cost estimates assumed steel changes to all coins, but because of fraud concerns related to changing the quarter, machines that only accept quarters (such as coin laundry machines) would not require modification, the GAO report says.
The full report, GAO-16-777, can be viewed HERE.
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