Desjardins is predicting the end of the nickel.

Hendrix Vachon, Desjardins' senior economist, says he can see the nickel going the way of the penny in approximately five years, in what could turn into a broader shift in Canada's currency system.

"Due to the gradual increase in the cost of living and decreased buying power of small coins, the time will come when the nickel will have to be taken out of circulation," Vachon wrote in a report released on Tuesday.

The report is a follow-up to a 2008 study by Desjardins, which suggested that the penny should be taken out of circulation.

"In keeping with our 2008 conclusions, we can already start planning for this change, so as to see it materialize within about five years," Vachon wrote.

The 2016 Desjardins report says removing the nickel would have to come with "other changes," including removing the quarter and revamping the Canadian coin system with 10-cent, 20-cent and 50-cent pieces.

"The decision on the size and make-up of these coins should also aim to minimize the costs of producing and using them," Vachon wrote.

The report says Canadians are moving away from using cash in their daily transactions, but they are not yet at the point when transactions are exclusively by credit or debit cards. Cash is involved in nearly 40 per cent of all transactions, and accounts for over 20 per cent of the value of all transactions in the country, Vachon writes.

He also points out the importance of keeping cash in circulation as a readily-available means of paying for something. "Cash can be identified with the desire for liberty," he wrote. "In the end, the solution is to adapt to consumers' needs, rather than trying to rush things."

The report says it would be "ill-advised" to do away with cash at this point, particularly because doing so would penalize the elderly and individuals with low income or low education. Those groups are most reliant upon cash, it says, and some might face difficulties in accessing the internet to conduct online banking.

Overall, the volume of cash used in transactions declined by 9.7 per cent from 2009 to 2013, while the value of transactions involving cash inched up by 0.2 per cent over the same period.

Canada currently has approximately $80 billion in coins and bank notes in circulation.