EARLIER this year the blogosphere was full of calls for America to pay its bills by minting a $1 trillion platinum coin. That idea has mercifully died, but the fiscal pressures that gave birth to it have provided the impetus for a less nutty variant: phasing out the dollar bill in favour of a dollar coin.

Among big economies America is one of the few that issues a low-denomination bank note (see table). Britain introduced the one-pound coin in 1983; Canada started replacing its one- and two-dollar notes with coins in 1987 and 1996, respectively. America does mint dollar coins but has failed to prise consumers away from their preference for the paper bill. Some $1.4 billion-worth of dollar coins have piled up in the vaults of the Federal Reserve, prompting the Treasury to order a halt to production in 2011.

Businesses from vending-machine operators to public-transport providers complain about the cost of counting and stacking dollar bills, and of fixing machines jammed by misfed bills. Many have already installed equipment to handle dollar coins “but we didn’t reap the savings by implementing the switch,” laments Aaron Klein, a consultant to the Dollar Coin Alliance, an advocacy group.

Having failed to persuade Congress to kill the dollar bill for business reasons, campaigners now promote it as a painless way to reduce the deficit. The switch would save $4.4 billion over 30 years, according to the Government Accountability Office, a non-partisan research arm of Congress. This is not, however, because of reduced production expenses (coins last longer than bills but are more expensive to make). Rather, the money comes from seigniorage: the difference between the face value of money and the cost of making it. Citing the experience in Britain and Canada, the GAO reckons America will need 1.5 dollar coins for every dollar bill withdrawn from circulation, meaning more seigniorage.

This is because coins circulate less frequently than bills. Consumers who don’t want bits of metal wearing holes in their pockets leave the coins in jars or lose them behind sofa cushions, where they facilitate no exchange and earn no interest. Coin collectors may also take them out of circulation. This is not costless. The higher seigniorage is, in effect, a tax. But whether the dollar bill is finally scrapped may depend less on the fiscal arguments than on which state carries more clout in Congress: Arizona, which mines the copper that makes coins, or Massachusetts, home of the company that makes paper for dollar bills.