European Commission to review euro coins series

[eurocoin]

In 2013, the European Commission for the last time reviewed the series of euro coins. At the time the main reason for this was the fact that euro countries lost significant amounts of money on the minting of 1 and 2 euro cents coins. There was at the time decided that the minting of these low denomination coins should be made more cost effective, something in which many euro area mints will have succeeded by the end of 2017. Although the costs have decreased, it turns out that most euro countries still loose money on the issuance of these coins.

In 2014, 2015 and 2016 the EC has held surveys as part of the Eurobarometer to get a view of the opinions of the inhabitants of the euro countries on the 1 and 2 euro cents coins. The results of these surveys will be taken into account in the new review that will be held this year. Furthermore they will look at the situation in countries where the 1 and 2 euro cent coins were already de facto discontinued.

One of the other reasons for holding the review, which the EC is by law mandatory to hold periodically, is the fact that the security of the 1 and 2 euro coins dates from the mid nineties and the quality of counterfeits has since the introduction of the euro increased significantly. Therefore updates to the security features will be considered.

Furthermore there will be looked at the fact that some Member States have excess stocks of certain coin denominations while other Member States continue to produce these very denominations. Coin migration and differences in national (coin) services affect Member States' costs and income from coin issuance; this can lead to losses and gains in the seigniorage accrual of individual Member States which may accumulate to significant amounts over time.

The Coin Group of the European Vending Association commented that a decision on the future of the 1 and 2 euro cent coins should be merely based on the behavior and demands of consumers. If a decision was made to stop production of the coins, they should also immediately be taken out of circulation so there is no need for processing them in the future. They also remarked that the possible introduction of a circulating 5 euro coin should too be part of the review. Many prices for products that can be bought in vending machines have significantly increased since the introduction of the euro and so the price of many such products is now near or higher than 2 euros. As many vending machines do not accept banknotes, the introduction of a 5 euro coin should be considered. For sure also as new production technologies and security features are now available.

Many vending machine manufacturers agreed that if no more 1 and 2 cent coins were going to be minted they should be withdrawn immediately. They also agreed that lowering the quality checks on the 1 and 2 euro cent coins to reduce costs or the introduction of new 1 and 2 euro cent coins made out of a different alloy, and so with different technical specifications, will only make things worse.

The Bundesvereinigung Deutscher Geld- und Wertdienste commented that they reject every change to the current series of eurocoins and banknotes.

[Figleaf]

I wonder if any vending machine accepting 1 and 2 eurocent coins was ever made, let alone commercially activated.

"Don't want change" is not a productive attitude. On the contrary, it makes sure the 'crats will not take you seriously.

Peter

[FosseWay]

I too don't see the relevance of vending machines to the existence or nature of 1c and 2c coins (or 1p and 2p coins in the UK). Even back in the last decade, the only vending machines in the UK that accepted 1p/2p coins were Royal Mail's stamp machines, because stamps cost a random number of pence and can't be discounted or surcharged in the way a chocolate bar can. I imagine that is similar in the eurozone.

For me the argument about abolishing low-value coins revolves far more around whether there is a public need for them. How much they cost to make is neither here nor there; it is a figure shorn of all context. For a start, coins are issued primarily to provide a common means of payment and thereby a tool for economic and social effectiveness and cohesion. Sometimes in order to achieve those aims you have to spend money that you don't get back in actual euros and cents on your balance sheet. We grasp this (most of the time, at least this side of the Atlantic) in respect of healthcare and education; we often have problems grasping it in respect of communications (both telecoms and physical transport); but we completely fail to get it in the context of money supply. But leaving that aside, it's a spurious argument in any case, as the cost of producing coinage as a whole is clearly far less than the value of the coins produced. We can arrive at a similarly artificially inflated figure by following one particular two-euro coin from ore to issuance in a bank on a remote French Pacific island.

And in the context of the EU budget or that of any of its member states, the amounts in question are chicken feed. If the public want the coins - i.e. people can come up with sustainable objections for getting rid of them - then it is the responsibilty of governments to keep making them. If they don't - either people actively say get rid of them, or the only objections to doing so amount to a dislike of change - then get rid of them. The same should apply to coins for which there isn't a "negative equity" issue.

[andyg]

Question is -
Why should I as a taxpayer pay to have something produced that is so worthless the next man chucks it in a hedge bottom?

[eurocoin]

I wonder if any vending machine accepting 1 and 2 eurocent coins was ever made, let alone commercially activated.

Vending machine manufacturers from around the world sent their comments to the EC so I assume they must exist (and not just a few of them). 

[chrisild]

As many vending machines do not accept banknotes, the introduction of a 5 euro coin should be considered.

Sounds like a step in the wrong direction to me. What would make more sense, in my opinion, is adapting those vending machines so that they do accept paper (and plastic). Besides, introducing a €5 circulation coin would violate the concept of a clear distinction between circulation and commemorative coins - legal tender in the entire euro area - and collector coins.

As for the lowest denominations, from what I have read about the discussion here in Germany, many people consider them to be a nuisance but still want to keep them. And not even the businesses are interested in giving them up; about a year ago a rounding test started in Kleve, NW which has not really been a big success. So I think the "soft exit" makes more sense - Italy will certainly not be the last member state that practically does away with 1 and 2 ct coins. But if the German retailers are so fond of them, let the German mints continue to make them ...

Christian

[eurocoin]

Some information from a recent article on the future of the Royal Mint of Belgium:

On the production of every 1,000 coins of 1 euro cent, the Belgian government currently loses 11.46 euros.
At the same time they gain 814.34 euros on the production of every 1,000 coins of 2 euro.

[eurocoin]

In addition to, and as an update of the above text an overview of things currently going on in the eurozone as taken from a presentation that Rüdiger Voss (EC) held at the Coin Conference a few weeks ago:

• Stocks of eurocoins are too high.



Being solved by:

- Depletion of own excess stocks
- Convergence of national production plans
- Harmonisation of minimum coins services offered by National Central Banks
- Lower mintage of 2 euro commemorative coins
- 'Coin Stock Exchange Platform'

• 1 and 2 euro cent coins.

- Loss of 140 million euros across the eurozone on their production since 2009
- Polls undertaken from 2014 up until 2016 show that 59-62% of citizens are in favour of discontinuation

- From 2018 production will start of less costly 1, 2 and 5 euro cent coins. This by taking better advantage of the technical margins while strictly staying within the legally binding specifications, the visual appearance of the current coins and the technical parameters applying to coin acceptance and authentication

- The European Commission did not want to provide further information on what exactly will change in the production process of the said coins. The EC is already aware that the more cost efficient way of producing the 1 and 2 eurocent coins will only lower the loss on the production of the coins but will not take it away entirely.

• Outdated security features.

- For some time there is now being worked on the implementation of a new security feature into the eurocoins, being nano structures of plastic particles which change colour when being emitted to different types of light.

Further decisions on the future of the 1 and 2 euro cent coins and on the security features are expected in the first half of 2018.

[redlock]

• Stocks of eurocoins are too high.


Being solved by:

- Lower mintage of 2 euro commemorative coins

Not lower mintage numbers of €2cc. Fewer issues per country instead!
In my eyes, it was a huge mistake to allow each Euro member country to issue two €2 cc per year. For me, it ruined this area of coin collecting.
I wish they would return to the old rule (1 coin per year and country). But I guess that won't happen as all the Mints are making money with all those ''nice little extras'' (coin cards, proof versions, ectr.)

[eurocoin]

Not lower mintage numbers of €2cc. Fewer issues per country instead!
In my eyes, it was a huge mistake to allow each Euro member country to issue two €2 cc per year. For me, it ruined this area of coin collecting.
I wish they would return to the old rule (1 coin per year and country). But I guess that won't happen as all the Mints are making money with all those ''nice little extras'' (coin cards, proof versions, ectr.)

When I first saw this presentation I thought the same (and thought it was great) but the European Commission later explained me it is lower mintage rather than less commemorative coins per year. The mints are spoiled now so there will never be returned to the old situation.

[redlock]

When I first saw this presentation I thought the same (and thought it was great) but the European Commission later explained me it is lower mintage rather than less commemorative coins per year.

This is ridiculous. If €2 coins are needed for circulation does it really matter if the coins have the regular design or a commemorative. Just look at German mintage numbers for the €2. Even in years with €2cc, the regular design had to be minted in high quantitiy.
But more importantly, lowering the mintage numbers of €2cc even more (just look at current finnish, maltese, belgian numbers for example) defies the original puropse of the €2 cc. This is so typical of the EU. Initial reasons and decisions are thrown overboard (or ignored -- many €2 cc never should have been minted if you look at the demands for such a coin) for no good resaon. 

[Bimat]

I'd prefer 1c and 2c coins getting scrapped and possible introduction of circulating €5 coin. €5 banknote eventually can be stopped too. Will save a lot of money.

Aditya

[redlock]

I'd prefer ...  possible introduction of circulating €5 coin. €5 banknote eventually can be stopped too.

Two problems with that:
--In some of the ''southern'' countries of the Eurozone (especially Italy) they would have prefered €1 banknotes instead of the €1 and €2 coins. I'd call it ''historic reasons.'' Coins had very low value in the pre-Euro era. Having suddenly coins that are worth something was something the public had gotten used to. Some still haven't. And now a €5 coin? Nah, in my eyes, that would be met with heavy resistence there.
--Some countries have issued €5 NCLT coins. It could and likely would cause a lot of confusion if there were suddenly circulation €5 coin together with €5 NCLT.

[Figleaf]

I think the most compelling reasons will be in the realm of bureaucracy. Coins are mostly a matter for the members states. Banknotes are wholly a matter of the union. Therefore replacing a banknote with a coin would be a shift of power from the union to the member states. Keep in mind that the members states also want to do away with at least the €500 notes and if possible the €200 and €100 notes. At worst, that would reduce banknotes from 7 to three denominations.

Meanwhile, the member states will hold on to the small coins as long as they don't get a 5 euro coin as compensation. The losses aren't big enough to matter on the budget, but in the battle for mint survival, turnover counts.

The obvious solution would be to find a concession to the union to offset their loss of power in the banknote sphere. That won't be easy, as any concession would weigh differently on different member-states.

My proposal would be to give the EU the public prosecutor's office they want. It has already been agreed on by treaty anyway. Putting it into a package deal would be a chance to limit its funding to a level that compensates for the losses from the banknote area only. As an added attraction, it would turn a euro budget item into an EU budget item.

Peter

[eurocoin]

With over a year of delay, the report is now ready: http://data.consilium.europa.eu/doc/document/ST-15360-2018-REV-1/en/pdf

Some interesting parts:

- While euro area countries make a loss on the 1 euro cent coins, most euro area countries do not make a loss on the production of 2 euro cent coins. Some euro area countries swap other denominations of their own for 1 and 2 euro cent coins of other countries instead of minting new ones.

- In 2014 Belgium passed a law for voluntary rounding, in 2017 Italy passed a law for mandatory rounding. In both countries rounding did since not become habitual.

- Shops obtain 1 and 2 euro cent coins from commercial banks, rather then from cash handlers. This as the transaction costs of cash handlers are too high. Because of this the cash handlers are stuck with large stocks. At the same time the commercial banks keep ordering new 1 and 2 euro cent coins from the national bank which every time has to order new ones to be produced.

- In 2017, 64% of the people was in favour of abolishing 1 and 2 euro cent coins while 33% was against it. In not a single member state the majority of the people are in favour of keeping the 1 and 2 euro cent coins.

- Abolishing the 1 and 2 euro cent coins does not lead to any measurable form of inflation.

- The Commission will explore which new appropriate security features could be developed for use in high-denomination euro coins (one- and two-euro coins); will pursue discussions in the competent fora on how coins with new security features could be issued and first-generation coins be withdrawn over time, without disrupting the smooth circulation of the other euro coins and the well-established cash circuit