EU considers phasing out 1c and 2c coins

Scofflaw

The European Commission on Tuesday (14 May) tabled several scenarios for the withdrawal of the 1 and 2 euro cent coins, with the cost of printing these coins greater than their use.

"The production of 1 and 2 cent coins is clearly a loss-making activity for the euro area with the difference between the face value of the coins and the price paid by the state to get them pointing at an estimated total cumulative loss of €1.4 billion since 2002," the commission said in a press release.

Public opinion about the 1 and 2 euro cent coins is "rather paradoxical", says the commission, referring to various Eurobarometers. On the one hand, people seem attached to these coins and fear inflation should they to disappear. But on the other hand, they do not re-circulate them.

http://euobserver.com/economic/120124

It may or may not mean an end to €1.99! style pricing - you can still price things as that, but they really will be €2 instead of you getting a tiny bit of change.

cordially,
Scofflaw

howamidifferent

What about the McDonalds euro saver meal then?

jester77

howamidifferent wrote: »

What about the McDonalds euro saver meal then?

It will still be a euro.

Schnitzel Muncher

howamidifferent wrote: »

What about the McDonalds euro saver meal then?

I can see you are easily confused...

Marsden

It's about bleedin time. The only place your likely to use these stupid coins is machines for parking and the likes, and most of them won't take them.

DoesNotCompute

Excellent idea.

Expect Irish retailers to commence price gouging.

DylanII

We dont use them in out shop anyway. If something comes to 19.95 to .99 they dont get change from a €20.

Smyths toystore will lose out since they never want to give you 1 cent change. I have to ask for it and when they say they have none, I tell them to give me 2 or 5 cent.

professore

DylanII wrote: »

We dont use them in out shop anyway. If something comes to 19.95 to .99 they dont get change from a €20.

You are gouging already before it comes in ...

dudara

When I lived in the Netherlands, a lot of the chains employed Swedish Rounding. Essentially, things were priced as normal, i.e. 97c. €1.28. At the till, your total was displayed correctly, but the shop assistant would round up or down to the nearest 5c and give change accordingly. I presume that the law of averages meant that it balanced out for the shop and consumer.

woodoo

DylanII wrote: »

We dont use them in out shop anyway. If something comes to 19.95 to .99 they dont get change from a €20.

I would ban pricing like that first off.

ardmacha

The ECB is getting what it deserves. The question is why the Euro was denominated at such a low level so that its fractions become useless within 10 years of its launch. If the Euro was worth twice as much it would have made more sense, i.e. IR£1.45

woodoo

ardmacha wrote: »

The ECB is getting what it deserves. The question is why the Euro was denominated at such a low level so that its fractions become useless within 10 years of its launch. If the Euro was worth twice as much it would have made more sense, i.e. IR£1.45

But they are still holding on to the 5 cents so €1.45 is still possible

Schnitzel Muncher

I like collecting, counting and bagging my change. This disappoints me.

deman

About time. The 1c and 2c coins were never introduced here in Finland and every time I go back to Ireland, I get cluttered up with these miniature coins weighing down my pockets. Nothing but a nuisance.

woodoo

deman wrote: »

About time. The 1c and 2c coins were never introduced here in Finland and every time I go back to Ireland, I get cluttered up with these miniature coins weighing down my pockets. Nothing but a nuisance.

I have a big jar off them and i'm too lazy to count them.

rainbowdash

deman wrote: »

About time. The 1c and 2c coins were never introduced here in Finland and every time I go back to Ireland, I get cluttered up with these miniature coins weighing down my pockets. Nothing but a nuisance.

Pity somebody in this country couldn't use the same level of intelligence, such rubbish coins they are.

skafish

woodoo wrote: »

I have a big jar off them and i'm too lazy to count them.

Bring them into the bank.... they will count them for you.

I bring my small change jar to my local pub about every 6 months. The banks charge business for change, so they are delighted to get it. Ant it pays for my few pints:D:D

Dannyboy83

Probably bad news for the charity boxes, otherwise i don't see the down side, it's very rare i use cash these days

I think that they'd just change to .95 pricing if these coins are withdrawn.

AlmightyCushion

woodoo wrote: »

I have a big jar off them and i'm too lazy to count them.

Bring a bunch to tesco and dump them in the self service till when you're buying something. You'll be rid of them in no time.

Cookie_Monster

The European Commission on Tuesday (14 May) tabled several scenarios for the withdrawal of the 1 and 2 euro cent coins, with the cost of printing these coins greater than their use.

That's not really the case though is it. Even if they cost say 50c to make each 1c coin it only has to be used in 50 transactions to 'pay for itself'. Considering how long coins tend to last it's easily achievable.

The Dutch system is a good one however and the same is applied in New Zealand, the total of the bill being rounded if paying in cash but remaining exact if paying by card.

SeanW

DylanII wrote: »

We dont use them in out shop anyway. If something comes to 19.95 to .99 they dont get change from a €20.

You better hope I don't come into your shop then ... because if something costs €20 but is priced €19.99 because you think your customers are morons, any goodwill I have to ye is gone, kaput ... and I'm going to want my cent back.

ardle1

ardmacha wrote: »

The ECB is getting what it deserves. The question is why the Euro was denominated at such a low level so that its fractions become useless within 10 years of its launch. If the Euro was worth twice as much it would have made more sense, i.e. IR£1.45

woodoo wrote: »

But they are still holding on to the 5 cents so €1.45 is still possible

??
Fill this blank with 'YES' or 'NO'
____ I dont understand the English Language.

Nody

Karsini wrote: »

I think that they'd just change to .95 pricing if these coins are withdrawn.

Nope, they would still charge .99 (and then round it up/down depending on what the total ends up if needed).

Scofflaw

ardmacha wrote: »

The ECB is getting what it deserves. The question is why the Euro was denominated at such a low level so that its fractions become useless within 10 years of its launch. If the Euro was worth twice as much it would have made more sense, i.e. IR£1.45

I can't work out whether this is supposed to be serious.

puzzled,
Scofflaw

Schnitzel Muncher

skafish wrote: »

Bring them into the bank.... they will count them for you.

Do you not need to bag them first?

antoobrien

ardmacha wrote: »

The ECB is getting what it deserves. The question is why the Euro was denominated at such a low level so that its fractions become useless within 10 years of its launch. If the Euro was worth twice as much it would have made more sense, i.e. IR£1.45

The euro was priced the way it was due to the bilateral agreements between the members of the ERM which controlled the exchange rates of the currencies. The prices were set in 1998 based on the market rates of the time. The ECB didn't choose the rates, it merely rubber-stamped them. The rates were chosen by the markets under frameworks defined in the Maastricht treaty.

31 December 1998 - Determination of the euro conversion rates

Ignoring the fact that this would have breached all sorts of treaties and agreements, do you really think that the other 10 contemporary Eruozone states as well as the 4 other EU members would have allowed Ireland to devalue the punt by 50%?

Btw, the euro rate was €1=IR£0.787564 - making "twice as much" IR£1.575128.

enda1

antoobrien wrote: »

The euro was priced the way it was due to the bilateral agreements between the members of the ERM which controlled the exchange rates of the currencies. The prices were set in 1998 based on the market rates of the time. The ECB didn't choose the rates, it merely rubber-stamped them. The rates were chosen by the markets under frameworks defined in the Maastricht treaty.

31 December 1998 - Determination of the euro conversion rates

Ignoring the fact that this would have breached all sorts of treaties and agreements, do you really think that the other 10 contemporary Eruozone states as well as the 4 other EU members would have allowed Ireland to devalue the punt by 50%?

Btw, the euro rate was €1=IR£0.787564 - making "twice as much" IR£1.575128.

He said the denominaiton not the rate specific to Ireland. The Euro could have had its denomination at a different level meaning the rate to each member state would be changed accordingly. So €5 would have been set at the value of what €10 was.

antoobrien

enda1 wrote: »

He said the denominaiton not the rate specific to Ireland. The Euro could have had its denomination at a different level meaning the rate to each member state would be changed accordingly. So €5 would have been set at the value of what €10 was.

He said both actually - sepcifying a rate of €1=IR£1.45

The denominations were the same (2 coin excepted) Ireland at the time, why would we object to that?

What (eurozone) country at the time didn't have a 1/2c equivalent?

enda1

antoobrien wrote: »

He said both actually - sepcifying a rate of €1=IR£1.45

The denominations were the same (2 coin excepted) Ireland at the time, why would we object to that?

What (eurozone) country at the time didn't have a 1/2c equivalent?

That that would have been Ireland's rate. All the other members would have been changed accordingly.

antoobrien

enda1 wrote: »

All the other members would have been changed accordingly.

Not paying attention again I see, that was never said either - the specified rate was the Irish one.

Remember the Euro currencies were in a set range for 5-6 years before the euro came in, the suggestion that the euro could/should have been devalued is a bit off and very definitely looking at things with almost 15 years of 20/20 hindsight.

Besides, with the exchange rates being picked based on market prices, if that had happened the markets would have merely bought/sold to bring the basket back to the "normal" levels.

enda1

antoobrien wrote: »

Not paying attention again I see, that was never said either - the specified rate was the Irish one.

Remember the Euro currencies were in a set range for 5-6 years before the euro came in, the suggestion that the euro could/should have been devalued is a bit off and very definitely looking at things with almost 15 years of 20/20 hindsight.

Besides, with the exchange rates being picked based on market prices, if that had happened the markets would have merely bought/sold to bring the basket back to the "normal" levels.

I think you need to reread the thread. You are simply misunderstanding. The value of all Euro released would not change regardless of the denomination.

You need to separate the two in your head. It's quite trivial to denominate in whatever system you want while not influencing the underlying value.

The Irish rate was quoted as it is most relevant to us. If the denomination relative to the Irish rate was doubled, then it would have to be doubled with respect to all other host currencies leaving the exchange rates of one currency to another (£IR to DM for example) as the same.

antoobrien

enda1 wrote: »

I think you need to reread the thread. You are simply misunderstanding. The value of all Euro released would not change regardless of the denomination.

You need to separate the two in your head. It's quite trivial to denominate in whatever system you want while not influencing the underlying value.

Stop being insulting, ardmacha specified both the rate and the denomination, not me. I picked up on the rate when there was no mention of the eurozone basket rates changing just ours.

The denomination thing is a red herring as they can be changed at any time. Are you old enough to remember the introduction of the 20p or the removal of the half-penny piece from circulation here in Ireland?

the_syco

Seeing how everything was rounded up for the pound to euro conversion, I'd say everything would be rounded up if the 1 & 2 cents were banned!

Farmer Pudsey

I think it was in Spain or the Cannaries before the Euro shopping prices as normal when it was totaled up if it came to a sum ending in 1or2 you got five cent back if it came to 3or4 you got no five cent back. Rounding up and down is fairly easy. Biggest change for retailers is no point in any longer pricing items at 19.99 you will either go to 20 or 19.95.

enda1

antoobrien wrote: »

Stop being insulting, ardmacha specified both the rate and the denomination, not me. I picked up on the rate when there was no mention of the eurozone basket rates changing just ours.

The denomination thing is a red herring as they can be changed at any time. Are you old enough to remember the introduction of the 20p or the removal of the half-penny piece from circulation here in Ireland?

It's fine if you misunderstood. Everyone makes mistakes.
We can leave it at that then.

antoobrien

enda1 wrote: »

It's fine if you misunderstood. Everyone makes mistakes.
We can leave it at that then.

Thank's for the apology:rolleyes:, next time don't talk about a link where there isn't one being claimed.

Alun

dudara wrote: »

When I lived in the Netherlands, a lot of the chains employed Swedish Rounding. Essentially, things were priced as normal, i.e. 97c. €1.28. At the till, your total was displayed correctly, but the shop assistant would round up or down to the nearest 5c and give change accordingly. I presume that the law of averages meant that it balanced out for the shop and consumer.

They did that with the guilder before the introduction of the euro anyway, so it wasn't new to them.

Alun

antoobrien wrote: »

What (eurozone) country at the time didn't have a 1/2c equivalent?

The Netherlands didn't, nothing smaller than 5 cents.

enda1

antoobrien wrote: »

Thank's for the apology:rolleyes:, next time don't talk about a link where there isn't one being claimed.

Rolleyeyes, they really are the new Godwin.

You've assumed the poster was stupid.
I've assumed the poster was using brevity as he assumed the intellect of the forum he was posting in.

Perhaps he assumed wrongly.

Max Powers

surely this will result in inflation if everything in shops is going to be dearer. excluding card transactions possibly

Scofflaw

enda1, antoobrien, leave off. You're particularly at fault there enda1 - your position is based on an assumption about ardmacha's post, not on what ardmacha actually said. Being dismissive because someone else didn't make the same assumption as you is pretty poor form.

moderately,
Scofflaw

enda1

Fine.

I'd look forward to the phasing out of these low coins as they cost a lot to administer. Was there a cost review on potential savings associated with doing away with them both economic and environmental?

Scofflaw

enda1 wrote: »

Fine.

I'd look forward to the phasing out of these low coins as they cost a lot to administer. Was there a cost review on potential savings associated with doing away with them both economic and environmental?

Sure - there's a lot more info here: http://ec.europa.eu/ireland/press_office/news_of_the_day/small-change-future-one-two-cent-coins_en.htm

The Commission has structured its analysis around four possible scenarios:

• Status quo: 1 and 2 cent coins continue to be issued under today’s conditions, without changing the legal or material context. They remain legal tender and continue to be produced with the current technical specifications (such as metal, weight and size) and without changing the production and issuance processes.
• Issuance at reduced costs: The coins continue to be issued but issuance costs are reduced through changing the material composition of the coins or by increasing the efficiency of the coin production, or both. This would address the problem confronting most euro area Member States facing losses as a result of issuance costs far exceeding the face value of the coins.
• Quick withdrawal: Under this scenario, the issuance of these denominations ceases and the coins in circulation are withdrawn, mainly through retailers and banks within a pre-established short time period. Binding rounding rules would apply as of the first day of the withdrawal period and the coins would cease to be legal tender at the end of the withdrawal exercise.
• Fading out: This scenario has the effect of a withdrawal, but achieves it in a different way. While the issuance of coins would cease and binding rounding rules apply also under this scenario, the coins would remain legal tender. They could still be used, but only for payment of the rounded final sum. Since no new coins would be issued, they would be expected to disappear gradually from circulation due to their high loss rate and lack of attractiveness as convenient payment means.

A number of key conclusions can be drawn from the stakeholder consultation and the analysis:

• The production of 1 and 2 cent coins is clearly a loss-making activity for the euro area with the difference between the face value of the coins and the price paid by the state to get them pointing at an estimated total cumulative loss of €1.4 billion since 2002.
• The attitude of the general public is rather mixed: while people are attached to these small denominations and fear the risk of inflation if they were to disappear, they handle these coins as non-value items and do not re-circulate them in payment channels. The resulting high loss rate combined with the existence of psychological prices leads to an ever-growing demand for issuance of new small coins, which today represent nearly half of the coins in circulation.
• While the economics of issuing 1 and 2 euro cent coins would plead for discontinuing issuance, cost elements need to be balanced against other considerations, notably the negative reaction from the general public that rounding rules could trigger.

The actual Commission reports are linked at the bottom of that page.

It's perhaps worth pointing out that the Commission only has phase-out as 2 of 4 options.

cordially,
Scofflaw

ardmacha

The Irish rate was quoted as it is most relevant to us. If the denomination relative to the Irish rate was doubled, then it would have to be doubled with respect to all other host currencies leaving the exchange rates of one currency to another (£IR to DM for example) as the same

.

May I clarify what I said, as this has been misinterpreted. The Euro is an artificial creation, it was pitched to be DM1.95, IR£0.77 etc. When introduced 1c was already a small coin. Had the Euro been pitched at DM3.90, DM5 or some higher value a 1c coin would have been worth more and would have continued to be useful for many years. There is little point in creating a currency with a one-hundredth component, if you then shortly decide that that component is then too small to be useful. Why pick a value where this will happen?

I did not imply a different value for Ireland specifically, the IR£1.45 was just a miscalculation.

antoobrien

ardmacha wrote: »

.

May I clarify what I said, as this has been misinterpreted. The Euro is an artificial creation, it was pitched to be DM1.95, IR£0.77 etc. When introduced 1c was already a small coin.

I remember using 1p & 2p coints right ip to the changeover, but retailers quickly started pricing items at 5c roundings because of the size of the new coins. It'd be an interesting thesis: Price increases driven by coin sizes in the early years of the Euro in Ireland.

ardmacha wrote: »

Had the Euro been pitched at DM3.90, DM5 or some higher value a 1c coin would have been worth more and would have continued to be useful for many years.

Do you see where the flaw in your reasoning regarding how the prices were set is? Your argument reads that the prices were set arbitrarily - which is clearly (then and now) not the case.

ardmacha wrote: »

There is little point in creating a currency with a one-hundredth component, if you then shortly decide that that component is then too small to be useful. Why pick a value where this will happen?

This is a bit of a red herring, the old (i.e. pre-decimal) pound had a coin worth 1/480th and until 1987(ish) the punt had a 1/200 value, which was removed approx 15 years after introduction. In 1990 or so the 20p coin was introduced - because of the amount of 10p coins being used, so denomination changes are not all that strange. Indeed it'd be worse if they didn't happen, imagine the amount of coppers (shrapnel) that sit in jars at home. Couple of hundred million perhaps? Wouldn't be a bad shot the the arm for the economy.

ardmacha

Your argument reads that the prices were set arbitrarily - which is clearly (then and now) not the case.

I didn't say prices were set arbitrarily. I said that the weight of the currency devised to measure these prices was set arbitrarily.

This is a bit of a red herring, the old (i.e. pre-decimal) pound had a coin worth 1/480th and until 1987(ish) the punt had a 1/200 value, which was removed approx 15 years after introduction

In 1971, petrol was 7p a litre, 1/2p could buy you 70 millilitres of petrol. In 2002 petrol wa €0.90 and 1c buys you 11 millilitres of petrol, so the Euro 5c is closer in value to the old 1/2p, than the 1c.

y0ssar1an22

I may be wrong about this but...
I read somewhere a while ago that Australia got rid of 1c and 2c coins because it was more expensive to produce them than they are worth.

If that is the case I assume it is the same for the Euro, in which case it should have been implemented a long time ago.

May be wrong though.:p

skafish

Schnitzel Muncher wrote: »

Do you not need to bag them first?

No, they can count and bag them by weight

Scofflaw

y0ssar1an22 wrote: »

I may be wrong about this but...
I read somewhere a while ago that Australia got rid of 1c and 2c coins because it was more expensive to produce them than they are worth.

If that is the case I assume it is the same for the Euro, in which case it should have been implemented a long time ago.

May be wrong though.:p

No. you're right - about 20 years ago. Same for NZ, I think, and Canada is on the verge of doing it. It's worth noting, however, that the EU is only considering it as one possible option.

cordially,
Scofflaw