Eliminating the fractional part of currency from circulation (Pennies, Cents, Paras, Kopeikas). An Analytic Study: An Analytic Study

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We present an analytical study which demonstrates that deterministic rounding policies are, in the absence of the fractional part of currency, exploited by retailers via strategic pricing. This shows that deterministic policies cannot be optimal. We then introduce fair stochastic rounding policies and demonstrate their power on the case of cash transactions in the U.S. in the potential absence of the penny. We deduce that the U.S. can safely remove both the penny and nickel from circulation provided these policies are carefully implemented.

Original languageEnglish
Pages (from-to)520-529
Number of pages10
JournalEastern Economic Journal
Issue number3
Early online date21 Sep 2016
Publication statusPublished - 1 Jun 2017


  • randomised rounding
  • rounding tax
  • strategic pricing

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