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Mr. Chairman and Members of the Subcommittee, I appreciate the opportunity to discuss the cost savings associated with the proposal to eliminate the one-dollar bill and replace it with a new one-dollar coin. In my statement, I will make three points:

• Savings to the government in production and processing costs from substituting the more durable dollar coin for the Federal Reserve dollar note would be on the order of $150 million per year when the change is completed.
  
  
• Conversion would also have a favorable effect on the budget deficit. The Congressional Budget Office (CBO) estimates that over the 1996-2000 period, budgetary savings would total $100 million as a direct result of reduced production and processing costs. In subsequent years, as the switch to coin nears completion, budgetary savings could exceed $200 million per year, even more than the government's saving on production and processing costs.
  
  
• Switching from one-dollar bills to one-dollar coins could also have secondary effects that could produce additional budgetary savings. Those effects are reflected in the interest costs on the government's debt and are not scorable under the Budget Enforcement Act (BEA). They would result only if the public was willing to hold a higher value of coins than notes; for example, if the public was willing to hold two one-dollar coins for each one-dollar note formerly held.

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