Author Topic: Japan to Restart Production of ¥1 and ¥5 Coins  (Read 1575 times)

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Offline Bimat

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Japan to Restart Production of ¥1 and ¥5 Coins
« on: November 30, 2013, 06:43:00 AM »
Production of ¥1, ¥5 coins to be restarted

November 30, 2013

The Yomiuri Shimbun

The Finance Ministry will restart production of ¥1 and ¥5 coins next fiscal year in response to the consumption tax hike in April, it has been learned.

It will be the first time that ¥1 coins have been made since fiscal 2009 and the first newly minted ¥5 coins since production was halted in fiscal 2008. Several hundred millions of each type of coin will be made, according to sources.

Stores are expected to use more ¥1 and ¥5 coins for change when the sales tax hike takes effect. Therefore, the ministry determined that the amount of both types of coins in circulation needed to be increased. The ministry stopped production of the coins because of reduced demand due to a wider use of credit cards and electronic money.

Source: The Japan News
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Offline Bimat

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Japan to Restart Production of ¥1 and ¥5 Coins
« Reply #1 on: April 01, 2014, 04:43:16 PM »
More ¥1 coins minted for first time in 4 years for Japan’s sales tax hike

Apr 01, 2014
Maan Pamintuan-Lamorena

As the sales tax increase to 8 percent began on Tuesday, demand for small change is expected to increase as well. Japan’s only supplier of ¥1 coins, Akao Aluminum Co., has just completed producing 26 million faceless 1-gram aluminum slugs in March, which were then forwarded to Japan Mint in Hiroshima to stamp the “1” symbol and the year on one side, while a symbol of a tree will be placed on the other.

As Japan’s coins come in ¥1, ¥5, ¥10, ¥50, ¥100 and ¥500 denominations, economics professor from Seijo University in Tokyo Masao Nakata said, manufacturing more coins is the solution for a possible shortage that comes with an increased tax. Shortage in coins affected retailers in 1989 when the 3 percent tax was introduced then. Production Manager of Akao Aluminum, Yoshinori Nakao said, “We still have orders to make another 30 millions coins.” The order comes with Prime Minister Shinzo Abe’s increased sales tax, which hopes to decrease the nation’s debt and to encourage inflation in an economy drowning in decades of falling prices. At the end of this year, Japan’s debt will amount to 242 percent of its economy, says the International Monetary Fund.

Despite the orders of more coins and the worth of the 26 million coins at $45,000 based on the London Metal Exchange, Akao, founded in 1960, will not earn any revenue from the first order as it required four new employees to come out of retirement and refurbish the inactive machinery. Using coins remains a popular form of payment in Japan in spite of the digital age, where cybertheft is also prevalent. According to the Bank of Japan, around ¥4.6 trillion coins are in circulation since December. As consumer prices are expected to increase by two percent by April next year, the Finance Ministry is anticipating a spike in coin usage. For the ¥1 coins alone, there are 38.8 of these in circulation. Spokesperson for Seria Co., a chain of ¥100 stores, Yoko Matsuda said, “We’ve tried to calculate extra coin demand using several scenarios. We do expect an increase in demand.”

Source: Japan Daily Press
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Online Figleaf

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Re: Japan to Restart Production of ¥1 and ¥5 Coins
« Reply #2 on: April 02, 2014, 02:26:34 AM »
A missed chance. Japan has been in a deflationary vicious circle for decades. It needs getting into inflation territory to re-start economic growth. Not minting the coins would have caused some extra inflation, exactly what the doctor ordered.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Bimat

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Japan to Restart Production of ¥1 and ¥5 Coins
« Reply #3 on: August 25, 2014, 07:16:57 AM »
Demand for ¥1 coins slow despite sales tax hike

9:58 pm, August 24, 2014

Jiji Press

Demand for ¥1 coins has remained sluggish despite an expected increase in demand after the consumption tax hike in April, as more and more people are using electronic payment systems.

This year, the government resumed minting ¥1 coins for the first time in four years, expecting that demand for small change would increase due to the tax rate hike to 8 percent from 5 percent.

As many as 25 million ¥1 coins were newly minted between January and March.

However, the number of the coins in circulation stood at 38.7 billion at the end of July, down by 200 million from the end of March, before the tax hike, according to the Bank of Japan.

Circulation is continuing to decrease after peaking at 41 billion in December 2002, and the downtrend has not changed after the tax increase.

The Finance Ministry plans to mint 160 million ¥1 coins in fiscal 2014, which ends next March. But the plan could be revised if demand remains weak, informed sources said.

Meanwhile, the use of electronic payment systems has been growing. The proportion of households using such systems stood at 47.6 percent in April-June, according to a survey by the Internal Affairs and Communications Ministry.

For example, “nanaco,” an electronic payment system offered by retail giant Seven & i Holdings Co., was used 120 million times in June, up 20 percent from March.

Demand for electronic payment systems is growing because they are convenient and also allow users to earn points, a Seven & i official says.

Source: The Japan News
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline repindia

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Re: Japan to Restart Production of ¥1 and ¥5 Coins
« Reply #4 on: September 06, 2014, 05:00:48 PM »
A missed chance. Japan has been in a deflationary vicious circle for decades. It needs getting into inflation territory to re-start economic growth. Not minting the coins would have caused some extra inflation, exactly what the doctor ordered.

Peter
Hello Peter,

Would you please explain why this is so? It would be very interesting to find out the co-relation. Many countries including India have a chronic shortage of small change-- and has high inflation too. Obviously you can't tie this totally to inflation but from your statement it does seem it does contribute a small part in inflation. Please explain-- I would be very eager to know.

Also if you would please do let us know how increasing the tax necessitates new coins into the system. I can only think of it as it increases the price of the products by a couple of yen and people might need more coins, but are there not already small change present? In the US there are billions of cents in circulation and a tax increase would not need the government to put more in circulation! I guess Japan would not be very different!

Sorry some basics being asked, but I am very interested to hear how the system works.

Thanks!

Online Figleaf

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Re: Japan to Restart Production of ¥1 and ¥5 Coins
« Reply #5 on: September 06, 2014, 08:22:06 PM »
Suppose you buy something that costs ¥100 and tax is 5%. You pay ¥105 yen and you'll never need a ¥1 or 5 coin. Now raise the tax to 8%. You should pay ¥108, but if there is no ¥5 or 1, you can only pay ¥110. That doesn't bother the seller, but the price for the buyer will have gone up almost 5%, while the tax hike was only 3%. It is similar for other values. You have a 90% chance that the tax amount will not end with a zero. As the amounts will always be rounded up the price increases, which is inflation.

Yes, India could use the same mechanism, but only if inflation is deemed too low. Current figures swirl around 8%, which is on the high side, so the mechanism would work in the wrong direction. Therefore, the scarcity of coins actually hinders economic development in India. Fortunately, the effects in both cases are not very strong.

Some economic growth and some dialling back of the money supply would do enough to get inflation back to normal (5-6% for a country like India). Japan doesn't have that option. In a situation of deflation, increasing the money supply has practically no effect and economic growth is a thing of the past. That's why even small inflationary effects are valuable.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.