Feds study nickel coin, no plans to ditch it

An internal federal analysis shows the government has studied the pros and cons of the nickel — but Ottawa insists it has no plans to force the fivecent coin into retirement, as it did the penny.

When the Royal Canadian Mint yanked the penny from circulation in 2013, the nickel became the country’s smallest circulating denomination of pocket change.

Since then, many people have expected it would only be a matter of time before Ottawa also eliminated the nickel.

Earlier this year, a Finance Department memo to senior officials examined the nickel’s purchasing power, usage and production costs.

Much of the April document, obtained by The Canadian Press under the Access to Information Act, was blacked out, including the “assessment” portion that likely discussed the coin’s future.

The uncensored portions of the memo explored the significance of the nickel in a post-penny era.

“As there are virtually no goods or services that can be purchased for a nickel, or several multiples thereof, the coin is generally used only to make change as part of larger transactions," said the memo, prepared for deputy finance minister Paul Rochon.

“The purchasing power of the nickel has eroded over time, relative both to prices and incomes."

The nickel’s purchasing power has tumbled 40 per cent over the last 25 years, the study said. Over a century ago — in 1914 — the nickel was worth more than a loonie in today’s terms, the document added.

The nickel entered circulation in 1858, when the Royal Mint in Britain produced them for the province of Canada. The Royal Canadian Mint started pumping out five-cent pieces in 1908 — and has since made 5.55 billion of them.

The memo says all G8 countries have a coin denomination equal to the Canadian nickel, but notes that New Zealand and South Africa have jettisoned their nickels over the past decade.

Still, Ottawa “has no plans to discontinue the nickel," Finance spokesman David Barnabe wrote in an email.

One reason to keep the nickel around could be due to the fact it’s still cost effective to mint them — and it may even become profitable.

The Royal Canadian Mint doesn’t share production costs for any of its circulation coins because it competes internationally for manufacturing contracts, a spokesman said.