Ditching dollar bill would net US billions

"Replacing the $1 note with a $1 coin could save the government approximately $5.5 billion over 30 years," the Government Accountability Office, a congressional watchdog, said in a new report.

Introducing new coins would actually cost the government cash in the first four years, mostly in minting costs, but after that Washington would make a mint.

According to the GAO about $184 million would be made on average every year thanks to seigniorage -- the government pocketing the difference between the face value of the new coins and their production cost.

But the government would also face a raft of technical and political hurdles to make the project work.

The one dollar coin in fact already exists -- 4.2 billion have been produced between 1979 and 2009. But it has not caught the US public\'s imagination. Notes remain the main tender in circulation and coins are rarely seen in shops, bars and restaurants.

Opposition in some quarters is vociferous. Legislation has even been brought to Congress to forbid the greenback\'s demise.

And if similar experiences in Canada, Britain, Japan and Australia are anything to go by, the handover would also have to be carefully planned.

For every dollar in circulation, an estimated 1.5 coins would have to be produced, or else there might be a shortfall.

"It is common for people to take coins out of their pockets and store them at the end of each day rather than retain them in their wallets as they do notes, for use the next day," the report explained.

In addition vending and self-checkout machines would have to be reconfigured, armored trucks upgraded to carry additional weight and vaults expanded.

For all that toil the cost benefits may change over time.

Ten years ago, in a previous estimate, the GAO predicted higher savings for the replacement scheme because notes only lasted 18 months on average.

That average has now risen to 40 months thanks to improvements in processing paper notes. That is good news for the government today, but bad for proponents of the coin scheme as it trims potential savings by $2.2 billion.

In contrast coins have an average life of at least 30 years, according to Federal Reserve officials.

But what if coins and notes both become redundant, as Americans turn to electronic payments?

"One possibility is that if the government replaces the $1 note with a $1 coin, electronic payments may increase as the public chooses to avoid the $1 coin," the GAO acknowledges.

That scenario would trim the savings to $4.5 billion over the 30 years.

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