The government said the one-cent coin costs too much produce and was described as “a burden to the economy” in a pamphlet released on Thursday.

According to an article published by the CBC, it costs the Royal Canadian Mint 1.6 cents to produce every penny.

“The government estimates it loses $11 million a year producing and distributing the penny, and that doesn’t include the costs and frustrations for businesses and consumers that use them in transactions,” the CBC reported. “A 2008 report by Quebec-based bank Desjardins estimated the penny’s existence cost Canada’s economy about $150 million in 2006. Canada’s big banks alone handle more than nine billion pennies a year, which costs them $20 million annually to process.”

The government said the penny has decreased to about 1/20th of its original purchasing power, but a report issued by the Bank of Canada in 2005 said the elimination of the penny wouldn’t lead to any inflation.

The one-cent coin will still hold their value, and consumers can still use the currency in transactions though under the new “penny plan” prices across the country will be rounded up or down to the nearest five-cent increment.

New pennies, however, will not be produced by the Mint so as coins get returned to financial institutions across the country, they will be recycled into their base materials leading to an eventual phase-out of the one-cent coin.

The Mint typically produces 7,000 tonnes worth of pennies each year, the CBC said.

This announcement comes in the same week the new $50 polymer bill was introduced into circulation. By the end of 2013, all Canadian denominations will be polymer notes. The new $100 bill was introduced in November.

SOURCE:
CBC: “The Penny’s Days Are Numbered”

On Monday at the Glasgow Sheriff Court, Ian Beaton admitted to creating the fake notes.

After police searched his car near Aberdeen and found £2000 of seized counterfeit notes with his fingerprints on the envelope the 44- year-old was arrested.

Around £28,000 of fake notes were recovered from his Shawlands home in Glasgow.

Between July 30, 2010, and January 22, 2011 Beaton pled guilty to making a quantity of Royal Bank of Scotland and Bank of Scotland notes.  He also admitted to having the materials needed to make the fake cash including a computer, printers, paper and guillotines for that purpose.

Procurator fiscal depute Mark Allan told the court that “No one was present within at that time, a search commenced, counterfeit money in particular Royal Bank of Scotland £20 and £10 notes and Bank of Scotland £20 notes were recovered in various locations within the flat.”

He also told the courts that police found paper, hard drives and disks from the computer’s internal memory as well as ink and other objects used to make the counterfeiting money.

“Towards the conclusion of the search which was by that stage 4pm, the accused arrived at the flat and identified himself as residing there. He was detained and taken to Cathcart Police Office, processed there, and interviewed there and at the conclusion of which he was cautioned and charged and made no reply,” he said.

Images of the Royal Bank of Scotland £20 notes which had been downloaded from an iPhone were found during the forensic analysis of the computer system, said Mr Allan. He added “The internet browser shows a record of a search for information relating to counterfeiting currency. There were other images on the hard drive of bank notes.”

Beaton was released on bail as Sheriff Charles McFarlane QC deferred sentencing until next month.

He said: “You have pled guilty to a serious counterfeit operation and the chances are, subject to anything that might be said, you will receive a substantial custodial sentence.”

SOURCE:

STV: ‘Counterfeiter made £30,000 in fake bank notes using digital images of £20′

Nearly 82 billion drachmas ($320 million) in banknotes were unaccounted for when the deadline for withdrawal ended on March 1 by the Bank of Greece, said Kathimerini daily. Drachma coins had an acceptance deadline of March 2004.

Most of the higher-value banknotes that were worth 10,000 and 5,000 drachmas have been cashed in over the past 10 years, but many 50 and 100- drachma notes were kept as souvenirs by Greeks and millions of tourists who visited the country over the years, reported the newspaper Kathimerini daily.

On January 1, 2002 the euro replaces the drachma as Greece’s legal tender.

The drachma was first introduced by ancient Greeks, and was introduced by the modern Greek state in 1832 after the Ottoman Empire- the country’s war of independence.

Greece on Friday completed a deal with private creditors to erase 107 billion euro’s of it’s debt in a bond swap of unprecedented value that is crucial for its economic survival.

SOURCES:

France24: ‘Greek drachmas worth 240 ml euros unclaimed as swap deadline ends: report’

Business Report: ‘Millions of Greek drachmas unclaimed’

Kathimerini daily

According to an article published by The Kurdish Globe, the central bank will introduce three new banknotes: 50 dinars, 100 dinars and 200 dinars.

The denominations are a change from old Iraqi currency as the country prepares to undergo a redenomination process, said Economic Committee Member of Parliament Abdul-Hussein Abtan. At a press conference this week, he announced that the new banknotes would remove three zeroes from the denominations starting in September and anticipates this process will take a year to accomplish.

“The process of removing zeros from the currency will contribute to dealing better with inflation, facilitate economic cooperation with international banks and reduce the differences in [standards of] living in society,” Abtan explained.

The redenomination process doesn’t come without its critics. Some members of the Iraqi government warned that deleting the zeroes could have a negative impact on financial trade in the stock markets.

However, Mahma Khalil, another member of the Iraqi Parliament, said the that move would help the country’s economy.

“The objective behind this move is to appreciate the value of the Iraqi dinar against the U.S. dollar, which would in turn increase the balance of the Iraqi dinar and there would be sufficient reserves of that currency,” he said.

Old banknotes will circulate with the new series for a period of one year until so the outdated series can be effectively removed from circulation.

The process must be gradual, said Khalil.

“According to the agreements, the new bill will be printed by a European company and introduced to the market gradually and in a well-planned schedule to ensure it will not result in shocks and would not have a negative impact on the market,” Khalil explained to The Kurdish Globe, adding the exchange rate between the new banknotes and the old ones would be 1:1,000.

The new notes, however, will be printed in Arabic, English and Kurdish. To date, no details about upgraded security features for the new series have been released.

SOURCE:
The Kurdish Globe: “New Banknotes To Be Introduced In September”

According to the American Foreign Press (AFP), hundreds of people lined up at the offices of France’s central bank on Friday to exchange old francs for euro banknotes as it was the last day mandated by the bank to make the exchange.

When the country first instituted the euro in 2002, the Bank of France set up a three-year period in which citizens could exchange franc coins and old-series banknotes for euros. The exchange period for newer francs, however, lasted until this year – ending Friday.

The bank saw more than 1,000 people stop by its offices on Thursday, and by Friday a lineup to make exchanges spilled out into the streets of Paris “extending halfway down the block,” the AFP reported.

The exchange wasn’t instant either. Those who dropped off their old notes will have to wait until March to receive notification of when and where to pick up their new euros.

In order to remind people to make the final exchange, a series of advertisements aired in France in advance of the deadline and the Bank of France set up a website to help citizens locate their nearest central bank branch.

However, not everyone who wished to make the exchange was so lucky.

Restaurateur Didier Montanari, ventured to the central bank after hearing about the deadline on the news but left disappointed after his three 100-franc bills from the 1980s were deemed too old to exchange.

“They don’t exchange the Eugene Delacroix,” he told AFP, referring to the French artist whose likeness graces the bills.

It was estimated that at the end of 2010 there were still 50 million franc notes at large, worth the equivalent of 602 million euros, the AFP reported.

SOURCE:
AFP: “Hundreds Queue In Paris For Last Chance To Cash In Francs”

If Scotland gains independence, they will have to choose whether or not to continue using the British pound – the currency used throughout the United Kingdom. Other options could see Scotland joining the euro or launching its own currency.

Scottish National Party (SNP) leader Alex Salmond said the most likely scenario would see Scotland retaining the pound temporarily.

“This would allow Scotland to control taxes, spending and borrowing while the Bank of England would continue to set monetary policy,” Reuters reported this week.

However, supporters of Scotland’s quest for independence aren’t all sold on the idea of retaining ties to the Bank of England.

“The answer to the currency question goes to the heart of what independence really means, because the lesson from the eurozone crisis is that sharing a currency means compromising, co-ordinating and losing independence, rather than gaining it,” wrote Douglas Fraser, BBC News Business and Economy Editor in Scotland.

Still, the most likely scenario proposed by the SNP is that Scotland would hang on to the British pound until they could join the euro. Doing this poses several challenges, according to Andrew Hughes Hallett, professor of economics at St Andrews University.

First, Scotland would have to go through the process of joining the Eurozone and ensuring that the Scottish currency (the pound) maintained a degree of stability against the euro for the last two year.

“How to maintain a stable relationship with the euro when you don’t have your own currency and when the inherited currency does not have a stable relationship with the euro. This would be messy,” wrote Hallet.

The least likely scenario seems to be that Scotland would launch its own currency should independence occur, as the country “has no gold or foreign exchange reserves,” said economists.

SOURCES:
Reuters: “Pound, Euro or Groat: Scotland’s Currency Options?”
BBC News: “Salmond’s Rate of Exchange”

The Bristol Credit Union and the Bristol Pound Community Interest Company (CIC) are at the helm of the project and anticipate that the new currency will be available by May 2012.

The initiative to install a local currency will foster a stronger sense of community interdependence, said Ciaran Mundy, the director of the program responsible for bringing about the Bristol Pound (£B).

“Big companies just hoover up money from a local area. Money goes into their financial system and typically out into London and into the offshore sector,” she said in an interview with the BBC. “As more and more shoppers and businesses spend the Bristol Pound, it will keep more of people’s hard earned wages in our communities to be spent again. [It] is also a powerful way to promote local businesses trading with each other.”

The £B will have the same value as sterling but will use a new series of banknotes that will be designed by citizens in the community. £1, £5, £10, and £20 notes will be issued.

The Bristol Pound won’t be the first local currency in the UK. Other regions such as Totnes, Lewes, Stoud and Calderdale have all undertaken a similar initiative.

However, according to the Digital Journal, Bristol differs from these other regions because they will be the “first to have the backing of a fully regulated financial services company [which] gives customers who open an account with the credit union a useful security of deposit guarantee.”

In addition to this, the Bristol initiative is also breaking ground because it will also allow businesses to make online payments to other traders and the local council has agreed to accept business rates payments in this currency.”

“People in Bristol who love the range of independent traders will be putting their money where it matters and reduce the need for lorries constantly moving goods up and down the country,” said Mundy.

SOURCES:
The Digital Journal: “Bristol Announces Launch Of Its Own Currency, The Bristol Pound”
The Telegraph: “Bristol To Have Its Own Currency”

In their proposed 2012 fiscal plan, the Thai government is attempting to borrow Bt400 billion to finance the budget deficit and intends to borrow another Bt400 billion in order to finance restoration projects that are necessary to help rebuild the country after it was struck by major flooding in the spring of 2011. On top of this, the government has also announced efforts to shift the public debt of Bt1.14 trillion to the Bank of Thailand’s account.

“The government’s plan to force the central bank to repay the debts of the Financial Institution Development Fund would result in the printing of more money for the government,” said Democrat MP Sansern Samalapa. “People would be happy for a while, for there would be no need to pay taxes, but then the banknotes would become worthless paper.”

Printing more money than needed is a dangerous road, writes MSNBC Senior Producer John W. Schoen.

“If you create more currency without raising the value of the whatever backs that currency, the value of the currency drops,” he says. “Currency is really just a piece of paper that stands for something of value. Increasing the amount of currency without increasing the value it represents just makes the currency worth less than when you started.”

Samalap provided examples of Latin American countries who tried to undergo similar debt shifts, and who ended up in situations of hyperinflation leading to the collapse of their economies.

Michael K. Salemi, an economics professor at the University of North Carolina, provides an account of one of these situations, which occurred in Bolivia.

“The Bolivian hyperinflation is a case in point. Eliana Cardoso explains that in 1982 Hernán Siles Suazo took power as head of a leftist coalition that wanted to satisfy demands for more government spending on domestic programs but faced growing debt service obligations and falling prices for its tin exports,” he writes. “The Bolivian government responded to this situation by printing money. Faced with a shortage of funds, it chose to raise revenue through the inflation tax instead of raising income taxes or reducing other government spending.”

Hyperinflation, Salemi says, always reduces an economy’s efficiency due to the fact that it drives people away from monetary transactions.

SOURCES:
The Nation: “Govnt Debt Policy Will Make Currency ‘Worthless’”
MSNBC Answer Desk: “US Budget Deficit Fix: Print More Money?”
The Concise Encyclopedia of Economics: “Hyperinflation”

According to an article published by RT.com, central banks throughout Europe are preparing contingency plans evaluating their needs for additional printing capacity should the euro – a singular currency shared by seventeen countries – come to an end.

The Central Bank of Ireland, for example, is assessing the capacity of their banknote facilities where they currently manufacture new euro bills. Last year, Ireland printed 127.5 million 10-euro notes.

“The bank’s printing capacities may not meet demand should the country need to come up with a hasty replacement for the euro,” RT.com said. “Officials are discussing reactivating old printers or
enlisting a private contractor to do the job”

Last week, in a segment that aired on PRI’s The World, banknote manufacturers and economists also said the industry could see some increased businesses if the euro collapses.

But it’s not all good news. A source from the Bank of England told the Wall Street Journal they were “concerned that if the eurozone unravels, the plant would be overwhelmed with orders and would not be able to print pounds. Britain is reportedly considering steps to ensure that such contingency would not cause damage to the UK’s own interests.”

Among other countries, Switzerland, Montenegro, Bosnia and Latvia are all beginning to look at post-euro plans should the currency bloc fail. To do that, RT reports, “they are now casting around for a new reference point – probably the German mark.”

SOURCES:
RT.com: “Plan B: Printing Presses on Standby To Beat Euro’s Demise”
PRI’s The World: “Making Money by Making Money”