The document discusses replacing the dollar bill with the dollar coin from both legal and economic perspectives. Legally, the U.S. Constitution gives Congress the authority to regulate currency, and Congress has already created legislation establishing dollar coins and requiring their use. Economically, dollar coins are more efficient because they last 30 years while dollar bills only last 5-6 years, saving billions in production costs over time. Combining the legal authority with the economic analysis provides a basis for Congress to legislate ending the dollar bill and making the dollar coin the sole U.S. dollar currency.

1. The End of the Dollar Bill: Market Efficiencies and
the Congressional Authority to End the Dollar Bill
By: Daniel Rezai
For: Prof. Perry
Charlotte School of Law
Class: Law and Economics
Semester: Spring 2015
Date: May 15, 2015
Table of Contents
1) Purpose of Paper
2) Legal Issue: Regulation of Currency
3) Economics Issue: Efficiencies
a. Cost/Benefit Analysis
4) Combination: What Drives the Choice
5) Conclusion
a. Where do we go from here?

2. Purpose
Currency is what we use to purchase the things we want. Although one never really
considers all that goes into creating, procuring, and regulating currency, it is an important aspect
to our government and its function. This paper will outline the governmental authority to
regulate currency and the ways in which the government has already done so as it relates to the
dollar bill. The paper will then discuss market efficiencies from a grand level, and use other
economic sources as a basis that the current currency system is wasteful by attaching a cost
benefit analysis to the use of dollar coins over that of the paper dollar. Combining these two
issues into a legal avenue by which to reduce expenditure and increase efficiency of the dollar as
a form of currency in coin form, concluding that the dollar coin should replace the dollar bill in
American currency moving forward on a longevity and cost saving basis for the American
Government.
Legal Issue
“To facilitate exchange, and thereby to encourage all sorts of industry and commerce, it
has been found necessary, in all countries that have made considerable advances towards the
improvement, to affix a public stamp upon certain quantities of such particular metals as were in
those countries commonly made use of to purchase goods.”1
Adam Smith posited that in order
for an economy and the country with that economy to make progress, coined money is essential.2
With this as a basis for countries to understand economic progression, it was only natural that the
United States be part of this system that allows for a monetary system to be created. “To Coin
Money, regulate the power thereof, and of Foreign Coin, and fix the standard of weights and
measures.”3
The Constitution of the United States clearly identifies as part of Congressional
power to regulate our currency. With this power comes the ability to regulate how money is
made, in what denominations, how frequently it is produced, and what it is to be made from.
1
Adam Smith, An inquiry into the nature and cause of the Wealth of Nations, 11 Encyclopedia
Britannica, Inc. (1952).
2
Id.
3
U.S.C.A. Const. Art. I § 8, Cl. 5
2

3. Moving into the legal powers that allow for the ending of the dollar bill, one must look to
legislation to see if proper steps have been made to create an environment where dollar bills can
cease to exist. “The Secretary of the Treasury may mint and issue only the following coins: a
dollar coin that is 1.043 inches in diameter.”4
Congress has created legislation that created a
dollar coin to be minted in the United States. “Notwithstanding subsection (d) and in accordance
with the provisions of this subsection, $1 coins issues during the period beginning January 1,
2007, and ending upon the termination of the program under paragraph (8), shall (A) have
designs on the obverse selected in accordance with paragraph (2)(B) which are emblematic of the
President of the United States…”5
This program created in 2007 allowed for the circulation of
dollar coins to commemorate the President of the United States, and all those men who have
served in that office. However, the legal language created more of a program than just a system
to honor our former leaders on a circulated coin, this is the basis for a new system using the
dollar coin as the basis for transaction currency used instead of the dollar bill.
Beginning January 1, 2006, all agencies and instrumentalities of the United States, the
United States Postal Service, all nonappropriated fund instrumentalities established under title
10, United States Code, all transit systems that receive operational subsidies or any
disbursement of funds from the Federal Government, such as funds from the Federal Highway
Trust Fund, including the Mass Transit Account, and all entities that operate any business,
including vending machines, on any premises owned by the United States or under the control
of any agency or instrumentality of the United States, including the legislative and judicial
branches of the Federal Government, shall take such action as may be appropriate to ensure
that by the end of the 2-year period beginning on such date-- (A) any business operations
conducted by any such agency, instrumentality, system, or entity that involve coins or currency
will be fully capable of--(i) accepting $1 coins in connection with such operations; and (ii)
other than vending machines that do not receive currency denominations higher than $1,
dispensing $1 coins in connection with such operations; and(B) displays signs and notices
denoting such capability on the premises where coins or currency are accepted or dispensed,
including on each vending machine.6
This language illustrates a clear intent by Congress to initialize a system by which the
dollar coin becomes a more readily available commodity within the United States currency
system. By placing such a requirement upon all organizations that receive funding from the
federal government to create a place for the use of dollar coins, the legislature was creating a
4
31 U.S.C.A. § 5112(a)(1) (Dec. 14, 2010).
5
Id at (n)(1)(A).
6
Id at (p)(1).
3

4. new system. This system by the language aforementioned in legislation was on in which a steady
stream of dollar coins would not only enter the marketplace, but that organizations using federal
funds would readily take and dispense of dollar coins into the stream of commerce. Similarly, the
legislatures were seeking a way to introduce a new currency into the stream of commerce, and
creating a system where this new currency would permeate the nations readily and freely.
The Board of Governors of the Federal Reserve System and the Secretary shall
take steps to ensure that an adequate supply of $1 coins is available for commerce and
collectors at such places and in such quantities as are appropriated by—(A) consulting to
accurately gauge demand for coins and to anticipate and eliminate obstacles to the easy
and efficient distribution and circulation of $1 coins as well as all other circulating coins,
from time to time but no less frequently than annually…7
By creating such language, the Congress at least in passing such legislation was attempting to
create a new coin that would by requirement, and Congressional oversight become a staple in the
currency system within the United States.
This legislative language exemplifies the purpose of this work. By drafting, passing, and
having turned into law this plan, the Congress has created a system by which dollar coins can
become a permanent fixture in the United States currency. Ready availability, usage potential,
and minting are all accounted for within the language of this legislation. By creating such a
system, the basis for elimination of the dollar bill from circulation was all but cemented in 2010
by the passage of this legislation. However, as indicated by the lack of language, the dollar bill
continues to be used as well in the United States. This brings on the natural conclusion, that the
only way to make the dollar coin the dollar of the United States, legislation must be passed to
eliminate the dollar bill from being printed in the United States. By referencing the Constitution,
we can clearly see the language exists to create such legislation. However, a proper purpose must
be given as to why such a change in legislative history is required, and for that to happen, an
economic approach is necessary.
Economic Issues
“The rise to dominance of paper money and coin tokens at the expense of metallic
currencies is not difficult to understand. It was a technological advance in the sphere of exchange
7
Id.
4

5. that was brought about by the technological changes in the sphere of production…”8
This quote
highlights the importance in economics in the use of a monetary system with which people in a
given nation trade. However, the major economic issue is how do we establish when market
efficiency has been created.
A capital market is said to be efficient if it fully and correctly reflects all relevant
information in determining security prices. Formally, the market is said to be efficient
with respect to some information set, Φ, if security prices would be unaffected by
revealing that information to all participants. Moreover, efficiency with respect to an
information set, Φ, implies that it is impossible to make economic profits by trading on
the basis of Φ.9
Based on this explanation on efficient markets, there is a need to change the language to properly
attribute the information to the purpose of this work. The currency market provided with
information on a change in currency minting position by the United State Congress will remain
unchanged regardless of the populous being informed of the shift in policy by the Federal
Reserve and the U.S. Mint. Therefore, the American populous will continue to spend the dollar
coin at a similar rate as they have with the dollar bill regardless of the medium in which a dollar
is presented once Congress shares the information that the dollar bill will cease to be printed and
phased out of circulation over time.
Combination: Legal and Economic Principles
As discussed in the previous two sections, the United States Government has been given
power to legislate the collective currency.10
As such, this power has allowed for Congress to
create a system by which the American people are aware of the usage of dollar coins. “The
Director of the United States Mint, shall work closely with consumer groups, media outlets, and
schools to ensure an adequate amount of news coverage, and other means of increasing public
awareness of the inauguration of the Presidential $1 Coin Program established in subsection (n)
to ensure that consumers know of the availability of the coins.”11
This brings the natural question
8
C.A.Gregory, Currencies, 554-555 The New Palgrave Dictionary of Money & Finance Vol. 1
(1992).
9
Burton G. Malkiel, Efficient Market Hypothesis, 739-743 The New Palgrave Dictionary of
Money & Finance Vol. 2 (1992).
10
U.S.C.A. Const. Art. I § 8, Cl. 5.
11
31 U.S.C.A. § 5112(p)(2) (Dec. 14, 2010)
5

6. of how does one then enter the dollar coin into circulation, and ultimately allow for the dollar
coin to overtake the dollar bill? The question seems to have an answer within the construct of the
market efficiency definition. “Moreover, efficiency with respect to an information set, Φ, implies
that it is impossible to make economic profits by trading on the basis of Φ.”12
Therefore, in order
to create an efficient market, there needs to be a way in which the dollar coin may enter the
market with the required information to make it a viable alternative for the dollar bill.
One issue facing this premise is that while the dollar coin is currently in circulation, so
too is the dollar bill a part of the economic framework of our currency. There needs then to be a
cost versus benefit analysis to conclude the only logical step is completely eliminating the dollar
bill as American Currency. “One and two dollar notes cost four and nine tenths cents to produce
per note.”13
“ There is a big financial incentive to sell Americans on dollar coins. While dollar
bills are cheaper to make-about 3 cents apiece- they need to be replaced after about 18 months.
Coins, which cost about 12 cents to make, last 30 years.”14
This brings me to the last statistical
data necessary for a cost benefit analysis, which are the Federal Reserve estimates on the lifespan
of the dollar bill. “The one dollar bill has an estimated lifespan of 5.8 years.”1516
While the estimates of the cost to mint a dollar coin are dated based on the age of the
article quoted, there is unfortunately no information provided by the U.S. Mint that currently lists
the costs and circulation life of the dollar coin on record. However, the information provided
shares two stark pictures of the use of a currency that shares the same value. First, we must
consider the cost of making the two currencies. The dollar costs are current time almost five
cents to make.17
While the costs of a dollar coin in the year 2013 was twelve cents per coin.18
12
Burton G. Malkiel, Efficient Market Hypothesis, 739-743 The New Palgrave Dictionary of
Money & Finance Vol. 2 (1992).
13
Federal Reserve, Frequently Asked Questions How much does it cost to produce currency and
coin?, (Last Visited May 3, 2015), http://www.federalreserve.gov/faqs/currency_12771.htm.
14
John Yang, Mint Halts Production of Golden Dollar Coin, (April 4, 2013),
abcnews.go.com/WNT/story?id=130409.
15
Federal Reserve, Frequently Asked Questions How long is the lifespan of U.S. paper money?,
(Last Visited May 3, 2015), http://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-
paper-money.htm.
16
Note: Both statistics provided by the Federal Reserve were notated in table format, and
then turned into print by author to reduce need for tables within paper.
17
Federal Reserve, Frequently Asked Questions How much does it cost to produce currency and
coin?, (Last Visited May 3, 2015), http://www.federalreserve.gov/faqs/currency_12771.htm
18
John Yang, Mint Halts Production of Golden Dollar Coin, (April 4, 2013),
abcnews.go.com/WNT/story?id=130409.
6

7. Based on these two estimates, the dollar bill is clearly the cheaper alternative to mass produce
and place into circulation. However, the key in making the decision on a change in usage rests
not in the overall cost of creation, but the longevity of life of the currency once placed in
circulation. A dollar coin can last roughly 30 years in continuous circulation within the United
States.19
While based on Federal Reserve estimates, a dollar bill lasts roughly six years in
circulation where it then must be shredded and destroyed by the federal government.20
The economic principles of efficient markets require that in order to justify a change to
create an efficiency, the information that is readily given by a person or in this case
governmental entity must not change the way in which the market reacts, and no one should be
able to see added monetary gains as a result of the spread of this information. To extrapolate
from this, the shift in money from the dollar bill to the dollar coin will make a few changes. First,
we will see a shift in what is expended from paper to make bills to metal to make coins. This will
in turn change where some of the money that is expended each year to create bills will go into a
different market to make coins. However, based on the longevity of the dollar coin, the recovery
that will be seen after the change has been made will allow for monetary saving by the federal
government. Although no mathematical equation has been created in this work to indicate how
much money can be saved over time it is a likely conclusion that because the dollar coin outlasts
the dollar bill by almost twenty years based on estimate of circulation life, dollars will be less
necessary to be produced each year by the mint than is currently required by the federal reserve
to keep up with the amount of dollar bills which are printed each year. “The move to a coin
would cost money in the short term, but eventually save money because paper currency lasts
about 42 months- while coins theoretically last forever. Moving to a coin could save 5.6 billion
over thirty years according to the Government Accountability Office.”21
Second, based on the abilities of the Congress to legislate the printing of money by the
Constitution, the dollar bill can be removed from circulation.22
By giving the Congress this
19
Id.
20
Federal Reserve, Frequently Asked Questions How long is the lifespan of U.S. paper money?,
(Last Visited May 3, 2015), http://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-
paper-money.htm.
21
Gregory Korte, Replacing $1 bill with coin could save $5.6 billion, (October 25, 2011)USA
TODAY usatoday30.usatoday.com/news/Washington/story/2011-10-24/dollar-enters-deficit-
debate/50898164/1.
22
U.S.C.A. Const. Art. I § 8, Cl. 5.
7

8. power, the founders were permitting the legislative body to change the printing of money over
time from the inception of the nation until present day. This coupled with the current knowledge
as provided by our Federal Reserve would allow for a more efficient currency marketplace in the
United States. However, the need for a change in currency standards must come from the
Congress. Although people may request their representatives in Congress push for this change,
the trend as it stands now is not based on an economic approach, but rather one of convenience
for a continual system. However, as we look at provided information about what a change in the
dollar can bring to the country, this more perfect information at least in theory would provided
the necessary points to the legislature to make the change. So, when you couple the legal
standard with the knowledge of a cost versus benefit analysis, and a wish for a more efficient
system through economic analysis, the conclusion rests that no dollar bill is a good dollar bill.
Conclusion
The ultimate work of this paper has properly illustrated not only the power of the
Congress to create money, but the legislation that has been provided that has previously created a
scheme for the production of the dollar coin. The economics point out that in order to be efficient
a market needs more information that once provided makes a trend shift where no one person
will benefit over the rest. Overall, the analysis provides that over the long term, full
implementation of a dollar coin as a replacement for the dollar bill would be quite beneficial for
the United States. However, this is not the current trend. The question then is where do we go
with this provided information? In order to answer such a question, the analysis provided alone is
not enough to impress upon the intended public and legislative bodies that the elimination of the
dollar bill is essential because as of today there is obviously no trend to make this possible.
“If dollar coins are an alternative rather than a substitute, that is, if the U.S. Mint
manufacturers them at the same time the Bureau of Engraving of Printing keeps making dollar
bills and the coin and bill are in circulation at the same time, the presumed savings not only
disappear but turn into additional costs.”23
This quote illustrates the precise problem we are
currently facing with the dollar coin versus the dollar bill debate. Both the coin and the bill are in
circulation at this time. Based on the aforementioned statement, the issue remains that, “the U.S.
23
Stan Collender, The Dollar Coin Isn’t Worth A Plugged Nickel, (May 1, 2014) Forbes,
www.forbes.com/sites/stancollender/2014/05/01/the-dollar-coin-isnt-worth-a-plugged-
nickel/.
8

9. Mint manufacturers them (dollar coins) at the same time the Bureau of Engraving of Printing
keeps making dollar bills…”24
This is ultimately the cause of the inefficiency in the market of
American Currency.
Therefore, the proposal is one that rests of two major ideas. First, Congress creating new
legislation calling for a systematic phasing out of the dollar bill. When the populace is no longer
given an option of whether to choose between a bill and a coin, then the ability to keep both in
place as dollar notes ceases. By alleviating the market of dollar bills, the dollar coin will and
must therefore become the common currency by which the dollar is considered. The legislation
in theory would read something similar to that of the legislation that created the Presidential
Dollar Coin system with the only major change being that the Secretary of the Treasury will be
instructed to cease the creation of dollar bills, and over a period of a year or so all banks,
businesses, and other non-citizen authorities will be given coins in exchange for their bills.
Secondly, as part of this scheme, the dollar bill will ceased to be considered legal tender under
the full faith and credit of the United States. This will cease the usage within the country because
if a bill no longer has the full faith and credit of the United States government to be accepted as
legal tender, the bill is as useless as the paper it is printed one. One facet of the exchange
program will work so that citizens over a period of time will be able to take their bills into a bank
to exchange for coins. By doing this, the legislature will ensure that the dollar bill is no longer
printed, traded, or spent within the United States.
Secondly, the Congress will pass legislation re-introducing the two-dollar bill into
regularly circulated currency. “The lifespan of Federal Reserve notes varies by denomination and
depends on a number of factors, including how the denomination is used by the public….
Estimated lifespans as of December 2013. Because the $2 note does not widely circulate, we do
not publish estimated lifespan.”25
Because the two-dollar bill is being printed, there is no need to
create any new currency. However, as the two-dollar bill is not regularly circulated into use,
there will be a need to re-introduce the bill to the populace. “The two dollar bill costs four and
nine tenths dollars to produce.”26
The fact that the two dollar and one dollar bill cost the same
24
Id.
25
Federal Reserve, Frequently Asked Questions How long is the lifespan of U.S. paper money?,
(Last Visited May 3, 2015), http://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-
paper-money.htm.
26
Federal Reserve, Frequently Asked Questions How much does it cost to produce currency and
coin?, (Last Visited May 3, 2015), http://www.federalreserve.gov/faqs/currency_12771.htm.
9

10. amount to produce, and yet the two dollar bill is worth double that of the dollar only creates a
further proof that instituting the two dollar bill back into circulation is the better result for the
currency of the United States. While some currencies have coinage as large as two units such as
the Euro,27
there is no reason to create such a scheme for the United State. Primarily because
there would be a need to create a whole new coin and system for two dollars while there is
already in place a two dollar denomination that is readily produced in the United States by the
Federal Reserve, but is not readily circulated.
Ultimately, the time has come for Congress and economists to form a meeting of the
minds. In order to be efficient, the cost savings indicate the end of the dollar bill in circulation
and print is necessary. First, we have a dollar coin already being minted. Secondly, we have a
two-dollar bill that can already replace the one-dollar bill readily available to enter circulation.
Therefore, the United State Congress need create new legislation calling for the end of the dollar
bill through a systematic withdrawal from circulation and production. Create a new legislation
re-introducing the two-dollar bill as the lowest circulated note in the United States, and finally
after many attempts such as the Susan B. Anthony dollar, the Sacagawea dollar, and now the
Presidential dollar will become part of truly used currency. Our currency market will become
more fluid and efficient because we will cease to have competing currencies28
, the U.S. will save
money over the lifetime of the dollar coin based on smaller production numbers, and less
recycling of coins, and the United States can cease the issue of choosing between a coin and a
bill by only having one to choose from. As an aside, to conclude, celebrating all our past
Presidents through the dollar coin system would give people a historical outlook on the United
States through our storied history. From Washington to Reagan, all these men who have served
and since passed will be emboldened on a coin for all people to see. While we will lose the
Washington only dollar, the Jefferson two-dollar bill will lose the stigma, and cease being held in
Federal Reserve banks. So, the currency market becomes more efficient, the competition
between coin and bill will be alleviated, and the United States will save money over the
foreseeable future. Overall, it is time for the dollar coin to make a comeback.
27
Euro Coins, National Sides, (Last Visited May 3, 2015)
https://www.ecb.europa.eu/euro/coins/2euro/html/index.en.html.
28
Stan Collender, The Dollar Coin Isn’t Worth A Plugged Nickel, (May 1, 2014) Forbes,
www.forbes.com/sites/stancollender/2014/05/01/the-dollar-coin-isnt-worth-a-plugged-
nickel/.
10