On my recent trip to El Salvador, I had the opportunity to experience a country that had given up on their own currency in favor of the US Dollar (and Bitcoin). Back in 2001, all Colones were removed from circulation and the Dollar became legal tender for all transactions. In 2021, Bitcoin was added but I just wanted to focus on the Dollar. The first thing that I noticed was the absence of pennies and $1 bills.
Different countries have different norms for how you pay for something. In Sweden, I could not get anyone to accept their own currency as they are predominantly digital payments. In The Netherlands, I was unable to use my credit card to buy a light rail pass or groceries, but a debit card with pin was just fine. In Iceland, buying gas with a credit card required a PIN and defaulted to $100 authorization.
So back to El Salvador. Instead of $1 bills, they used Sacagawea coins. Instead of pennies, they just rounded to the nearest nickel. It was really nice. I quickly ended up with a pocket full of change but I found myself actually using the coins for purchases. It was very similar to the £1 coin and the €1 coins in Europe. The rounding was inconsequential. If you pay electronically, you can still pay exactly the amount. I appreciated not having a bunch of pennies to deal with.
This week the US president announced that the US Mint will stop making pennies. This should be seen at your local convenience store pretty quickly. During the pandemic, we saw signs popping up at stores asking for pennies of exact change. It won’t take long for those businesses to adjust. I think the order should go further and abolish the $1 bill too.