The Agenda with Steve Paikin (Audio) - Royal Canadian Mint: The Role of Coins in a Digital Age

Episode Date: June 17, 2024

The Royal Canadian Mint is where Canadian coins are made. It makes circulation coins and precious metal products, such as bullion bars and coins, and collector coins. But in the digital age, what role will the Mint play? Jeyan Jeganathan meets with the team in Ottawa to find out and gets to see how some of the precious metal products are made.See omnystudio.com/listener for privacy information.

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So, what's going to happen to coins as we head into an increasingly digital future? The Royal Canadian Mint is where our coins are made. So we headed to our nation's capital to meet with its team to find out what role coins will play as we move our spending online. This is the president and CEO of the Mint, Marie LeMay. Thank you so much for having us at the Royal Canadian Mint. I want to start off by asking, as the CEO, how do you think of coins? I think coins have been, over the years, a stable, foundational part of humanity, actually. It's been the global language across countries and we underestimate the importance and the value that coins bring and there's a

trust in that piece of metal so that underpinning stability and confidence is something that in today's fast world and digital world, we can forget and take for granted. How much do you think everyday Canadians know what the Mint does on a day to day? Well, I think a lot of Canadians thinks that we print bills, but we don't. We actually work in the metal industry. So we do the coins.

We really have two areas of business. Circulation coins, so that's base metal coins. It's the coins that we use to trade in commerce. So the Canadian circulation, and we also do foreign circulation coins for other countries. And then the second area of business is precious metals, where we do investment products in gold and silver and we also do collector coins. And we also have a group that does medals, like some of the Governor General medals, Olympic medals at the time. So really we are in the metal business. Before we get into what will happen to coins in the future, we wanted to learn how coins

are made now. The Mint has two locations, one in Ottawa and one in Winnipeg, and each provide different functions. In Winnipeg is where circulation coins are made. That's the coin we have in our pockets, the loose change. There is on a daily basis about 2 billion coins that circulate in the country. And we recirculate through a system that we have and in collaboration with our financial institution partners and the armoured card carrier partners, we recirculate coins to the tune of 88%. So we only have to produce 12%.

To be able to maintain that skill, expertise and sovereignty in making coins, one of the things that we've done over the years is actually start bidding on contracts for other countries. The Mint, over the years, has also made foreign circulation coins and blanks for more than 80 countries, including Barbados, Sri Lanka, and New Zealand. And that represents 85% of what we do in Winnipeg. So we started looking at our business about five years ago and looking at the future, because obviously digital payment is increasing, and we thought, okay, where is the value in the work that the mint does?

So the production, obviously, the skills, the innovation. But the management of the coin system is extremely valuable for that efficiency, but also to make sure that there's no shortages. And you'll say, okay, if you're not using coins, why would there be shortages? You know, you have coins that are flowing every day. And we do the forecast and we talk to the financial institution, talk to the armored car care. We move coins around. Nobody knows. It's like plumbing.

You know, it flows and everybody, everything's good. And then COVID happens. Everything shuts down. So coins are, I'll say, stuck in the system somewhere. And then one province opens up with one type of industry. And then another one opens up with one type of industry, and then another one opens up with another type of industry. How do you make sure it flows if you don't know where the coins are? So the beauty of our system is we do know where the coins are.

So we were able to actually say, hey, over there, it's starting to open. There's a demand. There's less coins. We need to move coins around. So we were able to prevent shortages. As Marie mentioned before, it's not just circulation coins that the mint makes. It makes commemorative coins, metals, and even bars of gold and silver. And that all happens in the nation's capital, where precious metals are processed.

How do you get from a precious metal on the ground to a gold bar, for example? We work very closely with our mining sector and our financial sector because we are privileged in Canada to have some really, I'll say, good gold mines with a good ESG record. And there are two certified LBMA refiners in Canada, one of them for gold. What we do is we get what we call the dore from the mine, which is what comes out of the mine with initial melting and refining,

comes to us, and then we refine it here in Ottawa, two floors under where we're sitting right now. That's amazing. And we turn that into gold. But not only do we turn it into gold, not only do we turn it into gold the beauty is we turn it into gold to a purity that we were the first to do what we called five nine so that's ninety nine point nine nine nine what you'll see on the market is often four nines but the purity of the five nine we're

able to do that here in Ottawa. Why is that important you know having that standard? So the mint, the Canadian mint has been recognized for its innovation, for its leadership, so the purity of the gold shows the expertise and the capabilities and the skills. There's a number of security features that we've been able to embed so that when somebody buys a piece of gold from the Royal Canadian Mint they know they're buying good gold, pure gold, secure gold, and so it is an extremely important feature. The Mint in Ottawa makes precious metal products including bullion bars and coins and collector coins. It all starts here in the refinery where gold and silver are processed and purified.

This is Scott Ingham, the director of manufacturing at The Mint. He helps explain the process, start to finish, of how The Mint's gold maple leaf bullion coins are made. The process is relatively straightforward. The process is relatively straightforward, but prior to this, there is a whole purification process to take mined precious metal, mined gold, and to purify it to the 2, 3, 4, and even 5 nines purity, 99.999% purity. We start off in the refinery, where molten or purified gold is poured into bars that will be used in coin manufacturing or become pure gold investment bars. Gold destined for coin production is put through a process called continuous casting, where gold is melted in a furnace and then cast into large coils. The coils are then rolled out in a rolling mill into a coil of strip that is ready for

blanking. The coil of strip is then fed into a blanking press where perfect circles are cut out. They are collected, weighed, and eventually struck into the points in a coining press. All collector coins are inspected carefully by hand during the striking process. After seeing how much goes into making coins, the question remains. As we move toward an increasingly digital future,

will coins become obsolete? Depending on who you are, you can look around you and say, oh, my kids don't have any cash, I don't use any cash, and then you think the world is all now cashless. It's not the case. Like I said, there's still 2 billion coins floating in the country. That's the demand right now. But when we do surveys, it's become very clear that there's a, first of all, there's a segment of the population that needs the coin. And what we found from our survey is 83% of Canadians say they are cash users. But out of those, a quarter say regular cash users. But those regular cash users are mostly people with

lower income. They live in rural communities. We have some indigenous people, recent immigrants. So there's a segment of the population that is heavy users of cash. There's this thing that I call the paradox because when we ask Canadians, three quarters say I have no plans of going cashless, even if they're using more and more e-payments. I think there's that aspect that even if you don't use it, you don't want to lose the option to use it. At the end of the day, we see that it's not going to be cashless, it's going to be cash late. And for the foreseeable future, there's going to be coexistence of both digital and physical currency. So it's really important to keep the infrastructure and the system working to be able to make sure that people that need to use coins can use them, have access to them. And if there is a reason why in a certain area we have to use it because there is a crisis, there's fires, there's systems are down, then we can use them.

How do you think the role of the mint will shift over time? I really do think that we will continue to produce coins, obviously less and less. We will continue to produce coins, obviously less and less, but the management of the coin system, even if we weren't producing any coins, you'd still have to manage to produce or make available coins where they are needed, when they are needed, and that's critical and that's our role. So that's what all of our research, all of our planning is to make sure that we can continue to fulfill that and never have shortages. The Agenda with Steve Paikin is made possible through generous philanthropic contributions from viewers like you. Thank you for supporting TVO's