COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Issues related to the continued issuance of the 1 and 2 euro cent coins
Date: 2013-05-14
Institutions: European Commission
Subjects: Eurobond, European currency, copper

EUROPEAN 
COMMISSION 

Brussels, 14.5.2013  
SWD(2013) 175 final 

COMMISSION STAFF WORKING DOCUMENT 
Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Issues related to the continued issuance of the 1 and 2 euro cent coins 

{COM(2013) 281 final} 

EN 

   EN 

 
 
 
 
  
 
 
 
Table of Contents 

I. INTRODUCTION ……………………………………………………………………4 

1.  Mandate......................................................................................................................4 

2.  Approach and methodology .....................................................................................4 

3.  Stakeholder consultation based on questionnaire ..................................................5 

4.  Four possible scenarios for the 1 and 2 euro cent coins.........................................6 

II.  TWO  SCENARIOS  OF  CONTINUED  ISSUANCE  OF  THE  1  AND  2  EURO 
CENT COINS……………………………………………………………………….8 

1.  Scenario  of  continued  issuance  under  unchanged  conditions  ("Status  quo 
scenario")..................................................................................................................8 

1.1.  The legal framework of euro coin denominations ................................................8 

1.2.  Overview of issuance on 1 and 2 euro cent coins .................................................9 

1.3.  The  two  smallest  coin  denominations:  comparison  between  euro  and  other 
currencies..............................................................................................................10 

1.4.  Low value coins and the loss of purchasing power.............................................11 

1.5.  Appropriateness of the coin denomination structure..........................................12 

1.6.  Domestic demand and the loss rate .....................................................................14 

1.7.  Rounding of fractional prices ..............................................................................15 

1.7.1.The situation in Finland and the Netherlands...................................................15 
1.7.2.The situation in the other euro area Member States.........................................17 
1.7.3.Rules to be applied in line with the principle of legal tender of euro cash ......17 

1.8.  Cost factors of 1 and 2 euro cent coin issuance..................................................18 

1.8.1.Coin production and issuance costs .................................................................18 
1.8.2.Understanding the variation in costs ................................................................20 

1.9.  The citizens' experience with the use of the 1 and 2 euro cent coins.................21 

1.10. Usefulness of continued issuance........................................................................22 

2.  Scenario of continued issuance at reduced costs ("Issuance at reduced costs")23 

2.1.  Reducing issuance costs by changing the coin composition ..............................24 

2.2.  Reducing issuance costs by increasing efficiency of coin production ...............25 

2 

 
 
 
 
 
III.  TWO  SCENARIOS  OF  WITHDRAWAL  OF  THE  1  AND  2  EURO  CENT 
COINS……….……………………………………………………………………...26 

1.  Scenario of withdrawal with loss of legal tender ("Quick withdrawal scenario")
  ………………………………………………………………………………………26 

1.1.  Economic implications .........................................................................................26 

1.1.1.  Inflation: real or perceived? ..........................................................................26 
1.1.1.1.  View of the European Central Bank and euro area Member States......27 
1.1.1.2.  View of consumer and retailer associations..........................................29 
1.1.2.  Impact on state income: tax revenues and seigniorage .................................30 
1.1.3.  Impact on private stakeholder business.........................................................31 

1.2.  Social impact.........................................................................................................32 

1.3.  Impact on other coin denominations and the use of other means of payment ..33 

1.4.  Implementing measures accompanying a possible withdrawal scenario...........34 

1.4.1.  Legislative act by the European legislator ....................................................34 
1.4.2.  Implementing measures to be taken by public key stakeholders ..................34 
1.4.3.  Implementing measures to be taken by private key stakeholders .................36 

1.5.  Experience with withdrawal of low value coins ..................................................37 

1.5.1.     Euro area Member States prior to the euro changeover ..............................37 
1.5.2.     Other EU Member States and European countries......................................37 
1.5.3.     Withdrawal experience outside Europe.......................................................38 

1.6.  Continued issuance or cessation..........................................................................40 

2. Scenario of withdrawal through fading out while keeping legal tender ("Fading 

out scenario")...............................................................................................................42 

2.1.  Need for euro area rounding rules and practical consequences for the cash user
  ……………………………………………………………………………………43 

2.2.  Duration of the fading out scenario and role of the loss rate.............................43 

2.3.  Specific cost aspects of the fading out scenario ..................................................45 

IV. CHARACTERISTICS AND OVERVIEW OF THE FOUR SCENARIOS ….45 

V. GENERAL CONCLUSIONS ……………………………………………………...50 

3 

 
 
 
I.  INTRODUCTION 

1.  Mandate 

The introduction of the euro in 1999 was a major step in European integration. Since 1 
January 2002 the euro has been available in physical form, as banknotes and coins with 
now  around  330  million  EU  citizens  in  17  of  the  EU  Member  States  using  the  euro  as 
their  currency.  The  euro  coins  denominations  are  determined  by  the  Council  in 
accordance with Article 128(2) of the Treaty on the Functioning of the European Union 
and include eight denominations in the range from 1 cent to 2 euro. The denomination of 
euro coins is laid down in Council Regulation (EC) No 975/98. 

Recital 7 of Regulation (EU) No 651/2012 of the European Parliament and of the Council 
of 4 July 2012 on the issuance of euro coins (2012 OJ (L 201) 135) states that the use of 
different  denominations  of  euro  coins  and  euro  banknotes  should  be  periodically  and 
carefully  examined  by  the  competent  institutions  against  the  criteria  of  cost  and  public 
acceptability. Against this background and in accordance with Article 2, paragraph 2 of 
the  Regulation,  the  European  Commission  "shall  conduct  an  impact  assessment  on  the 
continued  issuance  of  1  and  2  cent  coins.  That  impact  assessment  shall  include  a  cost-
benefit  analysis  which  takes  into  account  the  real  production  costs  of  those  coins  set 
against their value and benefits." 

This  mandate  should  be  seen  against  the  background  of  the  current  debate  surrounding 
the usefulness of the two smallest euro coin denominations since their introduction. The 
main elements of this debate are the high production and processing costs of the one and 
two euro cent coins compared to their face value, the significant loss rate of these coins1, 
the decrease of the purchasing power of these two denominations and, should the coins be 
withdrawn, the concern among the general public that the cessation of issuance of the 'red 
coins' could raise consumer prices (problem of perceived inflation). 

In  line  with  this  mandate,  the  Commission  hereby  submits  an  assessment  on  the 
continued  issuance  of  1  and  2  euro  cent  coins  taking  costs  and  benefits  as  well  as  the 
public acceptance of these two denominations into account. 

2.  Approach and methodology 

In accordance with the mandate, the analysis is a fact-finding and stock-taking exercise 
on  the  continued  issuance  of  the  two  lowest  euro  cent  denominations.  Against  the 
background  of  the  debate  on  these  coins,  the  analysis  investigates  a  range  of  possible 
scenarios  implying  (a)  no  change;  (b)  maintaining  current  issuance  levels  but  reducing 
issuing costs; (c) immediate cessation of issuance and withdrawal from circulation; and 
(d) immediate cessation of issuance but gradual withdrawal from circulation. 

The  analysis  has  been  conducted  from  a  cost/benefits  and  public  acceptability 
perspective.  Even  though  the  mandate  specifically  focuses  on  the  real  production  costs 

1  The  loss rate  can  be defined as  the  calculation of one  minus  the  circulation  rate,  the  latter  being  the 
number of coins returned to the central bank divided by the number of coins put into circulation. 

4 

 
 
 
 
                                                            
compared  to  benefits,  the  term  costs  is  to  be  understood  in  a  broader  sense  with  the 
cost/benefits analysis embracing not only the costs of coin minting but also the costs of 
issuance, re-circulation as well as the handling and packaging costs.s. 

The facts and figures and other reported data of the analysis have three main sources: 1) a 
compilation  of  existing  statistics,  including  ECB  databases;  2)  results  from  a 
questionnaire conducted with key stakeholders; 3) analysis of the Eurobarometer surveys 
on coin usage and acceptance. Indeed, the citizens' views on the issuance of 1 and 2 euro 
cent coins were captured by relying on the analysis of Eurobarometer surveys on the use 
of  euro  coins.  The  European  Commission's  Flash  Barometers  (2003-2012)  provide 
systematic  survey  data  over  the  period  2002-2011  that  include  a  number  of  important 
questions on the use of euro coins. 

3.  Stakeholder consultation based on questionnaire 

A  group  of  'key  stakeholders'  was  consulted  on  the  issue  of  continued  issuance  and  a 
potential withdrawal scenario by using a questionnaire. The stakeholders were identified 
and divided into two main groups: public key stakeholders (from EU Member States and 
the ECB) and private key stakeholders (from European associations and business).  

Chart 1 

Groups of key stakeholders 

Private 
(represented 
European association) 

by 

Banks 

Retailers 

their 

actors
respective 

Public 
(National and European) 

actors

Treasuries 

National mints 

Cash-in transport companies 

National central banks 

Vending machine business 

European Central Bank 

Small and medium enterprises 

Consumers  

The  questionnaires  for  the  'key  stakeholders'  were  tailor-made  to  take  into  account  the 
specific role of the stakeholder with regard to the use of 1 and 2 euro cent coins. Besides 
the two more general key questions "Do you consider the issuance of 1 and 2 euro cent 
coins  useful?"  and  "Would  you  prefer  issuance  of  1  and/or  2  euro  cent  coins  to  be 
continued  or  ceased?",  the  questionnaires  embraced  two  groups  of  questions:  on  the 
current use of 1 and 2 euro cent coins and on a scenario where the issuance of 1 and/or 2 
euro cent coins were to cease (see annex for a summary of the questions).  

The  response  rate  varied  considerably  between  the  different  groups  of  key  stakeholders 
with  comparatively  low  response  rates  in  certain  groups.  Often,  the  respondents 

5 

 
 
 
 
 
 
submitted general observations and statements in broader terms rather than, as requested 
where appropriate, providing facts and figures.  

Chart 2: Response rate of key stakeholder groups 

• 

• 

• 

• 

• 

• 

• 

Euro area Member States:   65% (n=17)2 

Other member states:  

50% (n=10) 

National mints:  

National banks:  

50% (n=12) 

58% (n=17) 

Banking associations:  

25% (n=4) 

Consumer associations:  

100% (n=2) 

Retail associations:    

33% (n=3) 

4.  Four possible scenarios for the 1 and 2 euro cent coins 

In principle, issuance and use of 1 and 2 euro cent coins could continue as at present or 
stop  completely.  Against  this  background,  there  are  two  main  scenarios  to  be  explored. 
However,  based  on  the  results  of  the  questionnaires  and  the  stock-taking  exercise,  four 
possible scenarios can be identified: the two main scenarios with one variant of each. 

The first main scenario ("status quo scenario") is the continued issuance  of  the  1  and  2 
euro  cent  coins  under  today's  issuance  conditions  without  changing  the  legal  and/or 
material context. The coins remain legal tender and continue to be produced in line with 
the current technical specifications (such as metal, weight and size) and without changing 
the production and issuance processes. 

A variant of this scenario is the continued issuance at reduced costs ("issuance at reduced 
costs"). The cost reduction could be realised by changing the material composition of the 
coin or by increasing the efficiency of coin production or both. 

The  second  main  scenario  ("quick  withdrawal  scenario")  aims  at  the  abolition  of  the  1 
and 2 euro cent coins. Under this potential scenario, the issuance of these denominations 
ceases  while  the  coins  are  withdrawn  from  circulation  mainly  through  retailers, 
supermarkets and banks within a pre-established time period. Following experience with 
the withdrawal of national low value coins gained in various countries, this time period 
would  be  rather  short.3  Binding  rounding  rules  would  apply  as  of  the  first  day  of  the 
withdrawal period and 1 and 2 euro cent coins would cease to be legal tender at the end 
of  this  period.  If  considered  appropriate,  this  scenario  could  also  provide  for  the 

2   n=size of the addressees that received the questionnaire. 

3  As a recent example, the period for the withdrawal of the 50 øre coin in Sweden in 2010 lasted one 

month. 

6 

 
 
 
 
 
 
 
                                                            
possibility to change coins still in circulation after the withdrawal period has ended at the 
central banks for a limited or even unlimited period.4 

A variant of the quick withdrawal scenario is a "fading out scenario" which would have 
the  effect  of  withdrawal  but  achieve  it  by  different  means.  Rather  than  steering  the 
withdrawal  through  a  'call-back  exercise',  the  mere  cessation  of  issuance  and  'market 
forces' together with a constant high loss rate would suffice to remove 1 and 2 euro cent 
coins from circulation. The coins would disappear from circulation over time and without 
any supporting intervention, because no new coins would be issued and injected into the 
market. The fading out scenario is based on the assumption that cash users question the 
usefulness of 1 and 2 euro cent coins as a means of payment, the proof of which would be 
the very high loss rate of these coins. Under this potential scenario, issuance of the 1 and 
2 euro cent coins ceases but the coins remain legal tender while legally binding rounding 
rules apply as of cessation of issuance. The 1 and 2 euro cent coins could still be used, 
but only for payment to the rounded final sum. 

The chart below provides an overview of the four possible scenarios that are investigated 
in this paper. 

Chart 3 

1 and 2 euro cent coins: 4 scenarios 

Scenario 1: "Status quo scenario" 

Continued issuance under unchanged conditions 

Continued issuance 

Scenario 2: "Issuance at reduced costs scenario" 

Withdrawal 

Continued issuance at reduced issuance costs 

Scenario 3: "Quick withdrawal scenario" 

Issuance  ceases  and  withdrawal  with  loss  of  legal  tender
and applying rounding rules 

Scenario 4: "Fading out scenario". 

Issuance  ceases  and  fading  out  of  coin  circulation
while keeping legal tender and applying rounding rules 

This  staff  working  paper  provides  an  analysis  of  all  four  scenarios.  The  analysis  starts 
with the two scenarios of continued issuance focusing initially on the status quo and then 
the  variant  scenario.    The  analysis  then  turns  to  an  assessment  of  the  two  withdrawal 
scenarios,  followed  by  an  overview  on  all  four  scenarios.  The  overview  identifies  the 

4   Coins to be changed after the withdrawal period has ended would likely be hoarded coins. As central 
banks  would  probably  ask  for  a  change  fee,  it  is  uncertain  –  given  the  low  value  of  the  two 
denominations – that the change of 'late coins' (even of high amounts) would actually occur. 

7 

 
 
 
 
 
 
 
 
 
                                                            
necessary implementation measures for each scenario and highlights their advantages and 
disadvantages.  The  paper  concludes  with  presenting  the  key  findings  of  the  overall 
assessment. 

II.  TWO SCENARIOS OF CONTINUED ISSUANCE OF THE 1 AND 2 EURO 

CENT COINS 

1.  Scenario  of  continued  issuance  under  unchanged  conditions  ("Status 

quo scenario") 

Under this scenario, the 1 and 2 euro cent coin continue to be issued without making any 
changes  to  the  legal  context  or  the  production  process  of  the  coins.  The  coins  remain 
legal  tender  and  continue  to  be  produced  further  to  the  current  technical  specifications 
(diameter,  thickness,  weight,  shape,  colour  and  metal  composition)5  and  without 
changing the production and issuance processes. The Status Quo Scenario is investigated 
because it constitutes a useful benchmark for evaluating the three alternative scenarios. 

1.1.  The legal framework of euro coin denominations 

The determination of the denomination of euro coins is the exclusive competence of the 
European Union pursuant to Article 128, paragraph 2 of the TFEU6. In accordance with 
this provision, Council Regulation (EC) No 975/98 has laid down the details of the euro 
coin denominations and set the number of denominations at eight. 

Chart 4 

Denomination of euro coins 

Face value: euro cent 

Face value: euro 

1 cent 

2 cent 

5 cent 

10 cent 

20 cent 

50 cent 

1 euro 

2 euro7  

5   See Article 1 of Regulation (EC) No 975/98 (Official Journal L 139, 11.5.1998, p. 6), as amended by 

Council Regulation (EC) No 423/1999, 

6   Former Article 106 of the Treaty establishing the European Community. 

7  

Pursuant  to  Regulation  (EC)  No  975/98  (Official  Journal  L  139,  11.5.1998,  p.  6),  as  amended  by 
Council  Regulation  (EC)  No  423/1999  and  Council  Regulation  (EU)  No  566/2012,  and  Regulation 
(EU)  No  651/2012  (Official  Journal  L  201,  27.7.2012,  p.  135),  the  2-euro  coin  can  be  issued  as 
regular coin, commemorative coin or common commemorative coin as the case may be. 

8 

 
 
 
  
 
 
 
                                                            
In line with Article 128, paragraph 2 of the TFEU, only the Council, on a proposal from 
the Commission and after consulting the European Parliament and the European Central 
Bank,  may  adopt  measures  to  harmonize  the  denominations  of  all  coins  intended  for 
circulation to permit their smooth circulation within the Union. 

The number of euro coin denominations has remained unchanged since the introduction 
of the euro. All eight coin denominations are legal tender in the euro area. In line with the 
Commission's  Recommendation  on  the  scope  and  effects  of  legal  tender  of  euro 
banknotes  and  coins8,  all  eight  denominations  should  be  accepted  for  payment  and,  as 
stated in Council Regulation No 974/98 on the introduction of the euro, within the margin 
of maximum 50 coins per payment except for the issuing authority and for those persons 
specifically designated by the national legislation of the issuing Member State.910 

1.2.  Overview of issuance on 1 and 2 euro cent coins 

Since January 2002, the central banks of the euro area Member States have issued more 
than 46 bn coins with 1 and 2 euro cent denominations. This represents about 137 coins 
of these denominations per capita in the euro area. Although the number of issued 1 and 2 
euro cent coins is very high, the total value of these coins is only about EUR 714 million. 
This is only 2.8% of the value of all euro coins in circulation.  

In  terms  of  value,  the  total  of  euro  coins  in  circulation  has  nearly  doubled  since  the 
introduction  in  January  2002  from  EUR  12,3  bn  to  EUR  23,5  bn  in  August  2012,  The 
total  value  of  1  and  2 euro  cents  compared  to  the  value  of  all  euro  coin  denominations 
issued has increased by 94.5% over the same period, moving from 1,45% to 2,81 % (see 
Chart 4). (Within the same period, the total circulation of euro banknotes quadrupled in 
value from EUR 221,5 bn to EUR 896,4 bn.)  

Chart 5: Value of 1 and 2 euro cents (% over total value of coins) 

2002 
January  August 
1.09% 
0.50% 
1.72% 
0.95% 
2.81% 
1.45% 
Source: European Central Bank and Commission calculations 

2 cents 
1 cent 
Total (1 and 2 cents) 

2012 

Increase 
(%) 
119.1% 
81.5% 
94.5% 

With on average 1 coin out of 3 being a 1 or a 2 euro cent coin, the number of these coins 
has been already high in the first years after the introduction of the euro. Today, the ratio 

8 Official Journal L 83 of 30.3.2010, p 70. 

9  Article  11  of  Council  Regulation  No  974/98  on  the  introduction  of  the  euro  (Official  Journal  L  139  of 

11.5.1998, p. 1). 

10The  same  procedure  under  Article  128,  paragraph  2  of  the  TFEU  would  apply  also,  should  the 
composition of the 1 and 2 euro cent coins (e.g. in order to lower production costs) rather than the number 
of euro coin denominations be changed. 

9 

 
 
 
 
 
                                                            
is already close to 1 out of 2 given that both coins now make up for 45.6% of the total 
number of coins in circulation (see table 5). 

Chart 6: Number of 1 and 2 euro cent (% over total number of coins) 

2 cents 
1 cent 
Total (1 and 2 cents) 

2012 

Increase 
(%) 

2002 
January August 
16.07% 
15.31% 
31.38% 

25.46%  36.9% 
20.09%  23.8% 
45.55%  31.1% 

Source: European Central Bank and Commission calculations 

The  high  increase  of  1  and  2  euro  cent  coins  is  due  to  the  high  loss  rate  of  these 
denominations, as these coins appear to be often hoarded rather than re-circulated. 

1.3.  The  two  smallest  coin  denominations:  comparison  between  euro  and 

other currencies 

An  analysis  has  been  undertaken  that  aims  at  comparing  the  value  of  the  1  and  2  euro 
cent  coins  with  the  two  smallest  denominations  in  a  broad  range  of  countries,  so  as  to 
assess the structure of euro coins denominations against international practices. The set of 
analysed  countries  includes  the,  the  non-euro  area  EU  Member  States,  other  European 
countries  and  other  G20  countries.  The  value  of  the  two  smallest  denominations  was 
calculated in euro cent (for the calculation in purchasing power parity, see annex). 

It appears that that the value of the two smallest denominations is substantially higher in 
the  Nordic  Countries  (Norway,  Sweden,  and  Denmark)  as  well  as  in  New  Zealand  and 
Switzerland than in the euro area. However, when comparing with USA and Japan, the 
differences with the euro area are much less pronounced. While the value of the smallest 
denomination in those countries is a little bit smaller than in the euro area, the value of 
the second smallest denomination is slightly higher than in the euro area. In comparison 
with  the  other  countries,  the  value  of  the  two  smallest  euro  coin  denominations  is  not 
exceptional. 

Chart  7:  International  comparison  of  the  value  of  two  smallest  coin  denominations  by 
country (in € cent equivalent) 

Source: European Central Bank and Commission calculations 

10 

 
 
 
  
  
 
 
 
Chart  8:  International  comparison  of  the  two  smallest  denominations  by  country  (in  € 
cent equivalent) 

Euro (cents) 
2nd 
smallest
 denomination
64.16 
22.15 
13.42 
11.36 
11.12 

Latvia  

Code  Country 

Code Country 

  NO  Norway  
  SE 
Sweden  
  DK  Denmark  
  NZ 
  CN 
  CZ 
  CH 
JP 
  CA 
  US 
  HU  Hungary  

Euro (cents) 
Smallest 
 denomination
12.83 
NO  Norway  
11.07 
SE 
Sweden  
6.71 
DK  Denmark  
5.68 
New Zealand  
NZ 
5.56 
China 
CN 
Czech Republic   4.07 
CZ 
4.06 
Switzerland  
CH 
1.79 
HU  Hungary  
1.42 
LV 
1.00 
Euro  Euro Area 
0.96 
Saudi Arabia 
SA 
0.90 
Japan  
JP 
0.87 
Argentina 
AR 
0.81 
ME 
FYROM  
0.74 
AU  Australia  
0.73 
CA 
0.72 
US 
IS 
0.62 
UK  United Kingdom   0.58 
0.51 
BG 
0.50 
ZA 
0.43 
BR 
0.43 
TK 
0.41 
ID 
0.29 
LT 
0.29 
MX  Mexico  
0.24 
Poland  
PL 
0.24 
Romania  
RO 
0.15 
India 
IN 
India 
0.13 
Croatia  
HR 
0.06 
KO  Korea  
Croatia  
RU 
Russia 
0.02 
Russia 
Source: European Central Bank and Commission calculations.  

New Zealand  
China 
Czech Republic   8.13 
8.11 
Switzerland  
4.51 
Japan  
3.63 
Canada  
3.59 
United States  
3.58 
3.10 
IS 
2.83 
  LV 
2.15 
  BR 
2.14 
  TK 
  Euro  Euro Area 
2.00 
1.92 
Saudi Arabia 
  SA 
1.74 
Argentina 
  AR 
1.63 
  ME 
FYROM  
1.48 
  AU  Australia  
  RO 
1.18 
Romania  
  UK  United Kingdom   1.15 
1.02 
  BG 
0.99 
  ZA 
0.82 
ID 
0.58 
  LT 
0.58 
  MX  Mexico  
0.49 
  PL 
Poland  
0.32 
  KO  Korea  
0.31 
0.27 
0.12 

Bulgaria  
South Africa 
Brazil 
Turkey  
Indonesia 
Lithuania  

Bulgaria  
South Africa 
Indonesia 
Lithuania  

Canada  
United States  
Iceland  

Iceland  
Latvia  
Brazil 
Turkey  

IN 
  HR 
  RU 

1.4.  Low value coins and the loss of purchasing power 

As  will  be  illustrated  later  in  this  paper  (see  section  III.5),  there  are  many  examples  of 
low value coin denominations from other currencies that have been withdrawn over time. 
It  appears  that  an  important  consideration  in  this  process  has  been  the  gradual  loss  of 
purchasing  power  of  these  small  coins  as  a  consequence  of  inflation,  together  with  a 
widening  gap  between  the  price  of  the  metal  used  for  production  of  the  coins  and  the 
declining purchasing power of the denomination. For example, the Canadian Government 
decided to withdraw the one cent coin ('penny') as of February 2013 because of its rising 

11 

 
 
 
 
 
 
 
 
 
 
production costs relative to face value but also because of inflation. Due to the latter, the 
purchasing power of the 'penny' has eroded over the years retaining today only about one-
twentieth of its original purchasing power. 

Smaller denominations are by definition more prone to falling into disuse by the effect of 
inflation  since  their  face  value  is  already  very  low.  The  following  chart  shows  the 
evolution of inflation in the euro area since the introduction of euro cash expressed in the 
value of the 1 euro cent coin. It shows the extent to which the coin has lost purchasing 
power over that period. Today's purchasing power of the 1 euro cent coin is on average 
0.81 euro cent. 

Given the existence of inflation differentials within the euro area, the loss of purchasing 
power  has  been  more  pronounced  in  countries  with  higher  inflation  rates.  Though 
inflation  has  remained  at  a  very  low  level  since  the  launch  of  the  euro,  the  purchasing 
power of 1 and 2 euro cent coins has already eroded substantially.  

Chart 9: Development of the purchasing power of the euro since the introduction of euro 
cash (in 1 euro cent) 

Country  2002 2005 2008 2012
1.00  0.93  0.86  0.86 
IE 
1.00  0.95  0.90  0.84 
DE 
1.00  0.95  0.91  0.83 
NL 
1.00  0.94  0.89  0.83 
FR 
FI 
1.00  0.98  0.92  0.82 
Euro area  1.00  0.94  0.88  0.81 
1.00  0.93  0.87  0.81 
PT 
1.00  0.95  0.89  0.81 
AT 
1.00  0.94  0.87  0.79 
BE 
1.00  0.93  0.87  0.79 
CY 
1.00  0.93  0.87  0.79 
IT 
1.00  0.93  0.85  0.79 
MT 
1.00  0.91  0.84  0.76 
ES 
1.00  0.91  0.85  0.76 
LU 
1.00  0.91  0.83  0.75 
EL 
1.00  0.90  0.81  0.74 
SI 
1.00  0.83  0.76  0.69 
SK 
1.00  0.91  0.73  0.66 
EE 

Note: Data for December of each year. 
Source: ECB and European Commission calculations 

1.5.  Appropriateness of the coin denomination structure 

Despite  long-standing  research  on  the  "ideal"  coin  denomination,  experts  still  diverge 
when  trying  to  define  the  optimal  denomination  structure.  As  a  matter  of  fact,  most 
countries in the world use a currency denomination based on the 1-2-5 ratios or 1-2.5-5 

12 

 
 
 
 
ratios between one denomination and the next. There has been a considerable amount of 
research on the topic, a good summary of which is provided by Van Hove (2001). 11 

A widely discussed approach to analyse the appropriateness of a denomination structure 
has been proposed by Hentsch (1973). Hentsch observed that if the ratios of successive 
denominations  are  more  or  less  constant,  then  the  amounts  in  circulation  for  each 
denomination should generally be proportional to the square root of the denomination. He 
defined  an  indicator  of  "corrected  circulation"  (CC)  constructed  as  the  amount  in 
circulation per each denomination (V) divided by the square root of the denomination.12 
When the value of the indicator for a specific denomination is considerably higher than 
the values calculated for the other denominations, this would suggest that there could be a 
need  for  a  higher  denomination.  Conversely,  when  the  value  of  the  indicator  for  a 
denomination 
the  other 
than 
denomination,  this  would  suggest  that  there  could  be  a  rationale  for  withdrawing  the 
denomination concerned.  

the  values  calculated  for 

is  considerably 

lower 

Although  not  being  a  general  rule,  denomination  anomalies  are  more  likely  to  manifest 
themselves  at  the  upper  or  lower  end  of  the  denomination  structure.  One  reason  for  an 
anomaly  could  be  linked  to  inflation.  Higher  inflation  leads  to  an  overall  loss  of 
purchasing power of the smallest denominations which would induce consumers to prefer 
higher  denominations  thus  pushing  the  entire  denomination  structure  upwards.  While  it 
certainly  applies  to  the  country  level  within  the  euro  area,  where  inflation  differentials 
have persisted for a long time, it is somewhat less true for the euro area as whole since 
inflation has been relatively stable over the last decade. 

The chart below shows the result for the calculations of the Hentsch indicator at the Euro 
area  level  over  time.  The  values  of  the  Hentsch  index  are  significantly  lower  for  the  1 
euro cent coin (2 598 743) and 2 euro cent coin (2 890 147) than for the other euro coins 
(between  3  681  599  and  6  886  736).  These  results  would  point  to  the  existence  of  a 
rationale for withdrawing these two denominations.13 

11 See  Pattanarangsum,  The  Optimal  Currency  Denomination  Structure  (2011)  and  Leo  Van  Hove, 
Optimal  Denominations  for  Coins  and  Banknotes:  In  Defence  of  the  Principle  of  Lost  Effort,  in:  
Journal of Money, Credit and Banking, Vol. 33 No 4 (2001).  

12  The corrected circulation (cc) is defined as: 
CC =

V

i
v

i

13   There  are  two  other  interesting  results.  First,  the  index  is  significantly  higher  for  the  50€  banknotes 
than for all the others denominations, pointing to extensive use of this denomination. Second, the index 
for the 2€ and 1€ coins is higher than for all other coins and even than the index computed for the 5€ 
banknote. 

13 

 
 
                                                            
 
 
 
Chart 10: Appropriateness of the euro denomination (calculated by 'Hentsch' indicator) 

Euro 

2002 

2005 

2007 

2009 

2012 

500 
200 
100 
50 
20 
10 
5 
2 
1 
0,5 
0,2 
0,1 
0,05 
0,02 
 0,01 

3731178 
10121602 12606556 13182834 
8281135 
1709055 
2103977 
2617013 
2520647 
2201731 
10184424 12093299 14718611 16774507 
6731707 
17215979  25627815 31411332 36765598 43409189 
11035786 12030980 12384792 
8831415 
6367981 
6458248 
6215317 
5196543 
3440856 
3348703 
3177654 
2662198 
6030803 
5389039 
3499325 
6886736 
6184311 
5717568 
3586526 
6412731 
3539022 
3293128 
2598428 
3746346 
3875099 
3512867 
2243797 
4254611 
3497939 
3139071 
1749219 
3900785 
3179161 
2763496 
1355944 
3681599 
2404215 
2035550 
947662 
2890147 
2105860 
1757898 
706717 
2598743 

9658371 
5569918 
2872593 
4664960 
4909868 
2999949 
3035820 
2658976 
2267250 
1644100 
1393958 

1.6.  Domestic demand and the loss rate 

A large majority of Member States and national mints pointed out that there is a stable or 
increasing  demand  for  1  cent  coins.  In  some  smaller  Member  States,  the  demand  is 
strongly  influenced  by  withdrawals  from  non-domestic  customers  from  neighbouring 
countries. This is not the case in the two euro area Member States which actively limited 
the circulation of 1 and 2 cent coins. With a few exceptions, there have generally been no 
shortages  or  surpluses.  In  one  Member  State,  there  were  supply  disruptions  in  the  past 
that  were  caused  by  strikes.  In  some  cases,  reduced  production  of  coins  is  offset  by 
imports from other euro area Member States. 

Demand of private business for the 1 and 2 euro cent coins is relatively stable, with an 
increase  in  a  few  euro  area  Member  States.  However,  the  private  sector  replies  to  the 
questionnaire  point  to  a  variation  across  Member  States.  It  was  also  reported  that 
customers do not seem to use the 1 or 2 euro cent coins much while paying, but  rather  
receive them as change from the retailers. In addition, it seems that - once the customer 
has received those coins – they are often hoarded in cash collection devices such as piggy 
banks  and  others  for  possible  future  spending  or  for  charity  donations.  However,  it 
appears  that  in  those  countries  which  are  more  severely  affected  by  the  financial  and 
economic crisis, the smallest euro coins are beginning to playing a more important role. 
In those countries, the consumers' financial situation has worsened and consumers started 
to  increasingly  use  the  smallest  denominations  and  ask  for  small  coin  change  in  retail 
stores. 

The loss rate for 1 euro cent coins varies between 30% up to 100% in Euro area Member 
States. However, the majority of euro area Member States reported a loss rate higher than 
50%  as  1  euro  cent  coins  are  often  hoarded  and  sometimes,  as  stated  by  one  euro  area 

14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
  
 
 
 
 
  
  
 
Member State melted by hoarders for resale of the metal since their face value is lower 
than the value of the metal used for the production of the coin. 

The loss rate for 2 euro cent coins varies between 25% and close to 100% in in euro area 
Member  States.  The  majority  of  euro  area  Member  States  reported a  loss  rate  of  above 
50%, which nonetheless would be a little bit lower than the loss rate of the 1 cent coins. 

1.7.  Rounding of fractional prices 

Fractional prices are prices, which if paid in cash to the exact amount, would require the 
use  of  one  or  more  1  and/or  2  euro  cent  coins  at  the  moment  of  payment.14  Fractional 
prices  play  an  important  psychological  and  economic  role  mainly  in  the  retail  sector  to 
make  prices  look  cheaper  and  the  product  more  attractive  as  they  allow  for  an 
advantageous  use  of  the  digits  8  and  9,  namely  with  regard  to  consumer  products  of 
smaller value (such as products put out for purchase at e.g. EUR 0,89, EUR 2.98, EUR 
3.99 or EUR 19.98).15 

Fractional  prices  play  an  important  role  if  payment  is  made  in  cash  (including  coins), 
when  a  client  buys  one  item  or,  several  products  with  a  fractional  final  sum.16  As  a 
principle,  any  change  would  have  to  be  given  in  cash  and  at  the  exact  amount,  which 
means that small denominations including the 1 and 2 euro cent coins must be available 
at the point of sale to handle each cash transaction of any possible amount. 

1.7.1. The situation in Finland and the Netherlands 

As a rule, cash payments in the euro area can always be made to the exact amount.17 The 
situation  of  the  issuance  and  use  of  1  and  2  euro  cent  coins  in  Finland  and  the 
Netherlands is different from the situation in the other countries of the euro area. At the 
euro changeover in 2002, Finland issued 1 and 2 euro cent coins in smaller quantities and 
mainly  for  coin  kits  but  it  ceased  further  issuance  of  these  two  denominations  to  the 
public shortly after the changeover. Sporadically, 1 and 2 euro cent coins are being issued 
in Finland in very limited quantities for coin kits intended for collectors. The Netherlands 
issued 1 and 2 euro cent coins initially, but stopped further issuance in 2004. 

14   For a few goods and services of consumption at large-scale (e.g. petrol, telecommunication services) a 
custom is established to sell the good or service to the thousandths part of the euro (three digits behind 
the comma). Exact cash payment of these fractional prices cannot be effectuated with the existing coin 
denominations and rounding has to be applied for both cash and non-cash payment of the sum of the 
fractional prices. 

15   The higher the value of a good or service is, the less the use of fractional prices is important from a 
mere point of view of setting the highest but still generally accepted price. However the psychological 
effect of using the digits 8 and 9 for price setting (the price looks attractive) remains equally important 
even for higher amounts (e.g. EUR 9,98 or EUR 13,89 versus EUR 2.998,- or EUR 24,890). 

16   Fractional  prices  play  also  an  economic  and  psychological  role  where  payment  of  the  product(s)  is 
usually done electronically, such as large-scale purchase of technical products (e.g. spare parts) in the 
industry. 

17   Except for prices with more than two digits behind the comma, where rounding to the nearest cent has 

to be applied (for both cash and non-cash payments). 

15 

 
 
 
                                                            
Finland  and  the  Netherlands  consider  the  costs  of  production  and  handling  of  1  and  2 
euro  cent  coins  to  be  too  expensive  compared  to  the  face  value  of  the  coins  and  the 
benefit  these  denominations  have  for  payments  and  cash  transactions  in  their  countries. 
While  all  eight  euro  coin  denominations  remain  legal  tender  in  Finland  and  in  the 
Netherlands, the two countries limited the circulation of the 1 and 2 euro cent coins by 
introducing rounding rules.18 

The Finnish Act 890/2000 of 27 October 2000 on the rounding of payments denominated 
in  euro,  as  entered  into  force  on  1  January  2002,  provides  that  cash  payments 
denominated in euro shall be rounded downwards or upwards to the nearest multiple of 5 
euro cent. While prices of goods and services can still be set, agreed and displayed while 
using any 0 to 99 cent for calculation19, the total sum of the payment is rounded to the 
nearest  EUR  0.05  when  paying  with  cash.  Sums  ending  in  EUR  0.01,  EUR  0.02,  EUR 
0.06 and EUR 0.07 are rounded down; sums ending in EUR 0.03, EUR 0.04, EUR 0.08 
and EUR 0.09 are rounded up. Payments in the amount of 1 and 2 euro cents shall not be 
rounded.  In  principle,  the  rounding  applies  also  to  electronic  payments  except  if  the 
payment  is  effected  by  credit  transfer  between  accounts,  but  contrary  to  cash  payments 
rounding  by  non-cash  means  is  not  mandatory  (payments  "may"  rather  than  "shall"  be 
rounded).20  It  is  local  custom  in  Finland  that  payments  by  bank  card  or  other  payment 
cards are not rounded but debited to the exact amount ending in cent.  

Whereas  Finland  has  introduced  legally  binding  rounding  rules  for  cash  payment, 
rounding  rules  apply  on  cash  payments  in  the  Netherlands  since  September  2004  on  a 
voluntary basis, which is largely accepted by citizens and business. Voluntary rounding 
rules  were  introduced  accompanied  by  a  public  campaign  after  a  pilot  project  on  cash 
payment without 1 and 2 euro cent coins, while applying rounding rules was carried out 
and tested in a retailer district of the Dutch city of Woerden in 2004. 

As in Finland, prices of goods and services in the Netherlands can still be set, agreed and 
displayed while using any 0 to 99 cent for calculation. However, since 1 September 2004 
business in the Netherlands is free to decide to round the final sum of a cash payment to 
the nearest multiple of 5 euro cents. Sums ending in EUR 0.01, EUR 0.02, EUR 0.06 and 
EUR 0.07 are rounded down; sums ending in EUR 0.03, EUR 0.04, EUR 0.08 and EUR 
0.09  are  rounded  up  In  practical  terms,  nearly  all  small  and  big  retailers  in  the 
Netherlands have moved to rounding the final sum of payment and do not handle 1 and 2 

18   In  principle  Finland  and  the  Netherlands  issue  very  little  amounts,  amongst  others  for  collector 
purposes  (sets  of  circulation  coins  with  all  8  denominations)  The  average  issuance  since  the 
introduction of the rounding is as follows: Netherlands (2005-2012): 892.270 (1 euro cent coins) and 
921.380 (2 euro cent coins), Finland (2002-2012): 92.910 (1 euro cent coins) and 63.430 (2 euro cent 
coins). In 2012 the Netherlands issued nearly 8 million 1 and 2 euro cent coins (which were on stock) 
to react to requests from Dutch commercial banks. 

19  Prices  indicated  in  sub-divisions  smaller  unit  than  cents  (as  typically  done  for  telecommunication    
services with reference to minutes or seconds or for petrol with reference to one liter) would have to be 
rounded to the nearest cent. 

20   Act 890/2000 on the rounding of euro-denominated payments as amended by Act 496/2002 provides 
that  "a  payment  may  be  rounded"  [according  to  an  established  rounding  parameter]  "also  when 
debiting it in writing or when recording it as debt in lieu of payment, or when paid for a bank card or 
another  payment  card".  "Cent  amounts  shall  not  be  rounded  if  so  agreed  on  by  the  parties  or  if  the 
payment is effected by credit transfer between accounts". 

16 

 
 
                                                            
euro cent coins anymore. The rounding does not apply to payments by electronic means 
such as payment by debit card, e-purse, mobile phone or credit card. It appears that the 
voluntary rounding practice, as established in September 2004, is generally well-accepted 
by citizens and business as a customary habit in the Netherlands.  

1.7.2. The situation in the other euro area Member States 

Only a few euro area Member States provided replies to the question on the existence of 
rounding  rules  of  cash  and/or  electronic  payments.  From  the  responses  received,  it 
appears that there are no Member States, other than Finland and the Netherlands, which 
apply  rounding  rules  in  cash  payments  with  regard  to  the  use  of  1  and  2  euro  cents  in 
their  country.  It  seems,  however,  that  in  some  countries  habits  of  "voluntary"  rounding 
can be found typically at the local level for example in supermarkets, bakeries and other 
retailers which sell products with fractional prices. In these cases, it seems that sellers and 
purchasers apply rounding in order to speed up and facilitate the payment process.  

A few Member States reported on rounding rules that were applied successfully to cash 
payments  prior  to  the  euro  changeover.  One  case  concerned  the  abolition  of  the  two 
lowest denominations of the sub-unit (ending in 10 and 20), with the denomination 50 of 
the sub-unit becoming the smallest denomination.21  

1.7.3. Rules to be applied in line with the principle of legal tender of euro 

cash 

The  Commission  has  received  complaints  from  citizens  on  the  rounding  of  fractional 
prices22 in Finland and the Netherlands. They argue that they cannot use 1 and 2 euro cent 
coins  for  payment  of  the  exact  amount,  whereas  an  exact  electronic  payment  would  be 
possible.  This  would  lead  to  the  5  euro  cent  coin  becoming  de  facto  the  lowest  coin 
denomination in circulation in parts of the euro area (Netherlands and Finland) although 
all eight denominations are legal tender throughout the entire euro area. 

Against this background, it must be understood that any rounding habits in the euro area, 
either legally binding or by social convention, cannot alter the legal tender status of 1 and 
2  euro  cent  coins  as  of  any  other  euro  cent  coin.  Only  EU  rules  could  change  this 
situation.  Existing  rounding  rules  must  be  interpreted  and  applied  in  the  light  of  the 
principle of the legal tender of euro cash, meaning that these coins should continue to be 
accepted as means of payment in order to pay the rounded sum if the customer wishes to 
do so. What is more, confidence in the currency is very much reflected in how consumers 
perceive the value of cash (both banknotes and coins). Therefore, there should not be left 
room for any doubt on price transparency and the value of cash compared to other means 
of payment. Limiting the rounding rules to payments in cash might even affect the legal 
tender status of coins other than 1 and 2 cent coins. "Losses" and "gains" when applying 
rounding  to  final  sums  may  equalise  over  time  and  regardless  of  whether  payment  was 

21  As an example, for the sum of 150,30 or 150,70 to be paid in cash, the purchaser had to pay 150,50,  

whereas for the sum 150,80 the amount of 151 had to be paid. 

22  Fractional prices are prices which if paid cash to the exact amount would require the use of one or more 

1 and/or 2 euro cent coins at the moment of payment. 

17 

 
 
 
                                                            
done cash or by non-cash means. However, cash payments of rounded up amounts always 
suffer the effect of a surcharge compared to non-cash payments of precise amounts. This 
is in conflict with Commission Recommendation 2010/191/EU on the scope and effects 
of  legal  tender  of  euro  banknotes  and  coins  as  consumers  who  want  to  avoid  rounding 
losses might feel forced into non-cash payment means. 

1.8.  Cost factors of 1 and 2 euro cent coin issuance 

The  cost  factors  are  a  key  variable  for  public  actors  to  make  an  informed  decision  to 
continue  the  production  and  circulation  of  the  smallest  euro  coin  denomination.  As  for 
any  other  means  of  payment,  the  use  of  coins  comes  with  costs.  The  costs  of  coin 
production and issuance are covered by state income through tax contribution of citizens 
or  factored  into  prices  for  goods  and  services  (e.g.  to  cover  coin  handling  costs  of 
retailers or banks).23 

The costs of non-cash payment tools (such as debit cards, prepaid cards, credit cards or 
other  electronic  and  mobile  phone  payment  devices)  are  mostly  visible  to  the  user  by 
means of banking or service fees and rates. The costs of cash including coins, however, 
are  less  visible  given  that  the  costs  are  not  directly  charged  to  the  user  of  cash  and  are 
therefore less 'noticeable'.  

The  overall  costs  of  cash  are  related  to  various  cost  factors:  raw  materials,  coin 
production,  packaging,  transportation,  storage  and  other  distribution  and  re-circulation 
related costs for banks and retailers. In addition, there are costs related to the fitness and 
counterfeit checking of coins by banks and professional coin processors, to the supply of 
change and to the accounting costs of retailers. In principle, these cost factors apply to all 
coins  regardless  of  their  denomination.  However,  with  regard  to  production  and 
processing  costs  they  vary  according  to  the  size  and  weight  of  the  respective  coins 
including the raw material chosen for the production of blanks. While the cost factors can 
be  relatively  easily  identified,  the  challenge  lies  in  trying  to  quantify  the  different  cost 
factors. 

1.8.1.  Coin production and issuance costs 

As  regards  the  costs  of  1  and  2  euro  cent  coins  as  the  two  lowest  denominations,  the 
survey has revealed that two costs factors are of particular importance: (1) the production 
costs which tend to be above the face value of the coins causing a 'negative' seigniorage24 
and thereby a loss for the issuing Member State and (2) the over-production of 1 and 2 
euro cent coins to compensate for the high loss rate. The production of coins involves the 
use  of  raw  material  (i.e.  metal  used  for  the production of blanks)  as well as labour and 
capital  (i.e.  personnel,  machines  and  infrastructure).  When  considering  the  coin 

23   Given the non-visibility of direct cash costs, there is a risk of a misperception that the provision of cash 

comes for free. 

24  Seigniorage of coins is the difference between the face value of a coin and the costs to produce and 
issue  it.  The  positive  difference  between  the  two  parameters  ('positive  seigniorage')  is  a  lucrative 
source  of  state  income.  Given  that  coins  are  issued  in  high  quantities,  production  and issuance  costs 
decrease with any increase of coin issuance. 

18 

 
 
 
                                                            
production costs, three key components need to be investigated: (1) the costs of the raw 
material used for blanks; (2) the production cost of the blanks; (3) the costs of the final 
production (i.e. minting) of the coins. Different economic actors are involved in the coin 
production  process  and  have  'their  share'  in  the  different  costs  components:  metal 
producers and commodity traders (raw material), the blank producers (coin blanks) and 
the minting facilities25 ('ready-for-issuance' coin production). 

It  has  been  difficult  to  obtain  detailed  information  on  the  various  costs  elements 
mentioned  above  since  the  key  players  involved  in  the  production  process  (i.e.  blank 
producers  and  mints)  are  sometimes  reluctant  to  provide  information  on  the  costs 
elements,  as  they  consider  it  company-sensitive  information,  whose  release  could 
jeopardise their position on the market. Nevertheless, the low face value of the 1 cent and 
2 euro cent coins suggests that production costs tend to outweigh the actual face value of 
the coin denominations.  

Only  10  out  of  17  euro  area  Member  States  answered  the  question  whether  the 
acquisition/production costs of the 1 euro and the 2 euro cent coins correspond to or fall 
below  the  face  value.  It  is  likely  that  the  absence  of  answers  reflects  a  desire  not  to 
highlight an existing unfavourable situation. The majority of respondents replied that the 
acquisition costs of the 1-euro cent coins are equal or exceed the face value. The average 
calculated  from  the  5  euro  area  Member  States  that  provided  an  indication  of  the 
acquisition costs amounts to approximately 160% of the coins' face value. The difference 
in terms of acquisition costs across euro area Member States is large. While in a few euro 
area Member States the acquisition costs are slightly less than the face value of the coin, 
in other euro area Member States it can be as high as three to four times the face value. 

When it comes to the 2 euro cent coin, almost half of the euro area Member States which 
responded  is  confronted  with  acquisition  costs  that  are  higher  than  the  face  value.  The 
other  half  reports  that  the  acquisitions  costs  remain  lower  than  the  face  value.  The 
average  calculated  from  the  5  Member  States  that  provided  an  indication  of  the 
acquisition costs amounts to approximately 150% of the coins' face value.  

Whereas  it  is  questionable  whether  concrete  numbers  on  ('negative')  seigniorage  in  the 
euro  area  can  be  extrapolated  from  the  above  figures  provided  by  euro  area  Member 
States,  there  is  nonetheless  a  strong  indication  that  the  euro  area  as  such  suffers  losses 
from the 'negative seigniorage' attached to these coins. Since the introduction of the euro, 
20,2 billion 1 euro cent coins and 25,6 billion 2 euro cent coins have been issued with the 
overall  issuance  of  both  denominations  having  nearly  doubled  since  the  introduction  of 
the euro. The face value of these coins now amounts to EUR 714 million 26 and there is 
evidence  that  the  costs  of  all  1  and  2  euro  cent  coins  issued  are  higher.  The  exact 
calculation of the 'negative seigniorage' related to these coins is difficult as the relevant 
and  complete  set  of  data  was  not  made  available  by  the  euro  area  Member  States. 
However, an estimate could be made by extrapolating the information provided by the 5 

25  A majority of euro area Member States uses their national mint for euro coin minting purposes. Some 
euro  area  Member  States  do  not  have  own  mints  and  commission  mints  of  other  Member  States  for 
minting.  Germany  has  4  public  mints.  For  information  on  the  mint  structure  of  Member  States  see   
http://ec.europa.eu/economy_finance/euro/cash/mints/index_en.htm 

26   20,2 bn 1 cent coins = 202 million euro face value. 25,6 billion 2 cent coins = 512 million euro face 

value. 

19 

 
 
                                                            
euro area Member States that provided figures to the whole euro area. On this basis and 
on the assumption that the acquisition costs are respectively 160% and 150% of the face 
value of 1 and 2 euro cent coins since the introduction of euro cash in 2002, today's total 
acquisition  costs  of  all  1  and  2  euro  cent  coins  would  amount  to  1,09  bn  EUR  with  an 
estimated accumulated 'negative seigniorage' related to 1 and 2 euro cent coins of around 
EUR 376 million for the euro area. Using a weighted average, the negative seigniorage 
attached  to  the  issuance  of  1  and  2  euro  cents  coins  could  reach  EUR  1.4  billion  euros 
(the difference is due to a very unfavourable acquisition price in a large Member State).  

It is understood that the 'negative seigniorage' would be lower (but still negative) if the 
loss  rate  of  the  1  euro  cent  coin  were  at  a  normal  level.27  As  stated  above,  following 
information  provided  by  euro  area  Member  States  on  the  loss  rate,  the  rate  of  loss  of 
"their" 1 euro cent coins is in a majority of euro area Member States higher than 50 % 
with  the  consequence  that  less  than  one  out  of  two  coins  is  actually  used  for  cash 
transactions. A similar reasoning applies for the 2 euro cent coin, whereby the loss rate is 
however slightly lower. 

1.8.2.  Understanding the variation in costs 

Acquisition costs of 1 and 2 euro cent coins vary substantially between euro area Member 
States. Whereas a few Member States are confronted with acquisition costs that are still 
below face value (and issue the denominations at costs below face value), other Member 
States acquisition costs are as high as three to four times the face value. While detailed 
and systematic information on the various production cost components was not available, 
some  preliminary  and  broad  indications  can  be  made  on  the  basis  of  bilateral  contacts 
with  some  of  the  relevant  players  (e.g.  blank  producers,  mints).  The  costs  of  the  coin 
blanks are reported to amount approximately to around 50-60% of the coins' face value 
with costs for the 2 cent coin at the lower end of the range.  

It is reported that the largest part of the 50-60% blanks production costs is related to the 
costs of the raw material. This seems plausible, taking into account that the production of 
blanks takes place by private companies in a competitive market environment. Because of 
the  relatively  small  margins  involved  in  the  blank  production  process,  the  industry  has 
witnessed a vertical integration process whereby recently blank producers and mints have 
started  to  combine  forces  to  increase  their  financial  resilience  in  a  business  that  is 
characterized by high volumes and small margins. 

Based  on  these  preliminary  findings,  the  substantial  variation  in  coin  production  costs 
cannot be explained by the costs of the raw material or the blank production process but 
should rather be attributed to the final production process of the coins (i.e. minting) that is 
undertaken  by  the  national  mints  of  the  euro  area.  However,  further  analysis  would  be 
needed  to  investigate  whether  the  variation  in  costs  among  national  euro  area  mints  is 
caused  by  the  differences  in  the  labor  and/or  capital  costs  involved  in  the  final  coin 

27  No  figures  are  available  on  the  loss  rates  regarding  the  other  euro  coin  denominations  for  direct 
comparison.  However,  it  is  understood  that  no  coin  denomination  can  reach  a  loss  rate  of  0%  as, 
depending on the way coins are used in cash transactions (e.g. vending machines, exposure to dirt and 
dust, mechanical impacts and corrosion) coins can become unfit for circulation over time and need to 
be replaced. 

20 

 
 
 
                                                            
production process or if it is related to potential inefficiencies in the production process. 
The existence of these substantial cost differences between national mints can maybe be 
explained  by  the  quasi-monopolistic  situation  by  which  the  minting-industry  is 
characterized. Substantial costs differences are more likely to persist under such market 
conditions. 

1.9.  The citizens' experience with the use of the 1 and 2 euro cent coins 

Since  the  changeover  in  2002  until  now,  regular  surveys  have  been  conducted  on  the 
experience  of  citizens  with  using  the  single  currency.  Those  surveys  also  included 
specific  questions  related  to  the  experience  and  to  the  preferences  of  citizens  regarding 
the use of the different coin denominations. 

In  a  2012  Flash  Eurobarometer,  euro  area  citizens  were  surveyed  regarding  their 
experience with the handling of euro cent coins including the 1 and 2 cent coins. 78% of 
citizens  in  the  euro  area  say  it  is  easy  to  distinguish  and  handle  euro  coins,  while  21% 
experience difficulties. Since 2003, the proportion of respondents considering it easy to 
handle euro coins has remained relatively stable (around 70%-78%).28 

Chart 11 

Source: Flash Eurobarometer 362 in 2012 

28 Flash Eurobarometer 362, 2012 p.14. 

21 

 
 
 
 
                                                            
The 21% of respondents who found it difficult to recognise and handle euro coins were 
asked which coins caused them particular difficulties.29 The result shows clearly that the 
2-cent euro coin was considered to be the most problematic – by 69% of those who said 
they had difficulties  handling euro coins (this represented  14% of all respondents). The 
second most difficult coin to handle was the smallest denomination, the 1 cent euro coin 
–  according  to  60%  of  those  having  problems  handling  the  euro  coins  (13%  of  all 
respondents).  Just over half (51%) mention the 5 cent coin, while 43% the 20 cent coin. 
Based on the Eurobarometer results, it can be concluded that citizens consider overall that 
the  euro  coins  are  relatively  easy  to  handle  with  however  less  favourable  responses  for 
the 1 and 2 euro cent coins. 

Chart 12 

Source: Flash Eurobarometer 362 in 2012 

1.10. Usefulness of continued issuance 

When assessing the usefulness of the continued issuance of the 1 and 2 euro cent coins, it 
is  appropriate  to  mention  a  number  of  known  benefits  of  continued  issuance  for 
stakeholders and citizens. The 1 and 2 cent euro coins allow small cash payments to be 
made. Cash is anonymous, widely accepted and allows for easy circulation without direct 
costs  for  the  consumer.  Cash  including  the  small  coin  denominations  is  the  most 
accessible means of payment for the financially weaker members of society as it does not 

29 Flash Eurobarometer 362, 2012 p. 17. 

22 

 
 
 
 
                                                            
necessitate  a  financial  intermediary  at  the  moment  the  payment  is  made.30  The  small 
coins allow charging low prices for specific retail products. In addition, it allows charging 
fractional prices. Finally, keeping the 1 and 2 cent euro coins allows the continued use of 
these  coins  for  social  fundraising  and  donations.  Very  often,  customers  in  shops  are 
invited to donate their change at the cash desk for charity. 

Notwithstanding  the  known  benefits  of  the  continued  issuance,  a  majority  of  euro  area 
Member States that responded to the questionnaire did not consider the issuance of the 1 
euro  cent  coin  useful  based  on  a  number  of  arguments.  First,  the  acquisition  costs  of  1 
and  2  euro  cent  coins  are  too  high  with  production  costs  exceeding  the  face  value. 
Second,  1  and  2  euro  cent  coins  cause  additional  costs  for  business  and  consumers 
including very high transportation and processing costs. Third, the coins are not accepted 
by vending machines and are often hoarded by people. However, some euro area Member 
States want continued issuance of the 1 and 2 euro cent coins. They argue it will help to 
avoid inflation by avoiding upward rounding of prices. Moreover, it allows charging low 
prices for very specific retail products. 

The majority of the private actors, which were consulted, consider the issuance of 1 euro 
cent  coins  useful.  Many  prices  are  still  set  at  the  cent  level  and  therefore  the  smallest 
denominations  remain  useful  to  provide  change.  However,  consumer  associations  point 
out that the debate is larger than simply weighing the financial costs of 1 and 2 euro cent 
coins. Beyond factors such as consumer habits, traditions and the economic situation, the 
discussions on the issuance of the smallest denominations of euro cent coins are part of 
the larger debate, namely the cost of cash versus electronic payment instruments. 

Consumer  associations  point  out  that  cash remains  the  most  popular  means  of  payment 
among consumers, especially as regards relatively small transactions. These associations 
complain  that  considerable  resources  are  spent  by  the  financial  industry  on  trying  to 
convince  the  policymakers  that  cash  is  much  more  expensive  than  electronic  payment 
instruments, and that the market share of cash transactions should therefore be reduced. It 
is said that the financial industry's arguments are based on studies that usually calculate 
the  cost  of  cash  for  banks  and  retailers,  while  omitting  the  consumer  and  advantages 
offered  by  cash.  The  associations  argue  that  cash  has  an  important  financial  and  social 
inclusion aspect. For "unbanked" people, it is the only accessible means of payment and 
does  not  necessitate  an  intermediary  at  the  moment  the  payment  is  made.  In  addition, 
cash  is  convenient  for  many  consumers,  at  least  for  small  payments,  and  it  enables 
consumers to keep a close check on their spending. 

2.   Scenario of continued issuance at reduced costs  

This scenario entails the continued issuance of the smallest denominations while looking 
into  possibilities  to  reduce  the  current  costs  of  issuance.  As  explained,  the  production 
costs of 1 and 2 euro cent coins appear too high causing 'negative' seigniorage in several 
euro area Member States with the issuance of those coins having become a loss-making 

30   As regards the increasing relevance of payment transactions through a payment card see Commission 
Staff Working Paper: Impact Assessment accompanying the Document Commission Recommendation 
of 18 July 2011 on access to a basic payment account (SEC 2011(906)).  

23 

 
 
 
                                                            
business from a state income point of view. There seem to be two major options to lower 
the costs and make the 1 and 2 euro cent coins cheaper to produce.  

2.1.  Reducing issuance costs by changing the coin composition 

The  first  option  is  to  change  the  composition  of  the  coins  and  use  cheaper  and  less 
precious  metal,  although  with  changing  the  diameter  and  thickness  of  the  coins.31 
However, the analysis of the cost of the coin production process has revealed that the cost 
of the blanks does not exceed 50-60% of the face value.  

Even  on  the  assumption  that  the  biggest  part  of  blank  production  costs  relates  to  raw 
material costs, it is not obvious why coin acquisition costs are of up to three or four time 
the coins' face value. In this regard, the final coin production process (i.e. minting) plays 
a  crucial  role.  A  second  option  would,  therefore,  be  to  focus  on  the  coin  production 
process and investigate the potential inefficiencies to be tackled. 

There is some room for cost reduction by changing the composition of the coins. Further 
to a technical statement by technical experts from European mints32, there seems to be a 
number  of  potential  alternatives  that  are  broader  than  only  focusing  on  a  change  in  the 
composition. Also other actors have emphasised that the current composition of copper-
plated  steel  is  already  a  rather  cheap  solution  particularly  in  view  of  the  technical 
requirements  which  the  euro  cent  coins  need  to  fulfil.  However,  according  to  the 
technical  statement  improvements  on  the  material  costs  side  could  be  reached  in  three 
different ways: 33 

•  Optimising the existing manufacturing tolerances of the 1 and 2 euro cent coins, 
without  changing  the  overall  specification.  This  could  lead  to  costs  savings 
around 5% of the price for coin blanks. 

•  Reducing  the  thickness  of  the  copper  layers,  without  changing  the  other 
specifications. This could potentially reduce the coin blank costs by 5 to 10%. 

•  Changing the composition of the coins towards stainless steel. This would change 
the colour of the 1 and 2 cents from red into grey but could lead to cost savings in 
the range of 10-13% on the cost of the blanks. 

31  Additional  savings  while  producing  smaller  1  and  2  euro  cent  coins  are  not  an  option  given  that  the 
current 1 and 2 euro cent coins are already small and the parameters are set to meet the practical needs 
of  euro  cash  users  and  amongst  others  visually  impaired  people  in  particular.  The  legally  binding 
technical specifications laid down in Council Regulation (EC) No 975/98, as discussed with euro cash 
users during the legislative process provide. When preparing the introduction of the euro in 1998, the 
technical specifications of the coins were also discussed with euro cash users. A consensus was reached 
that  the  minimum  weight  of the  euro  coins  is  2 grams  whereas  the variation of  the diameter  between 
two coins must be 2 mm at least. 

32   Letter from the Mint Directors Working Group, Utrecht, 23 January 2013. 

33   The second and third solution would require extensive testing and further studies in order to check the 

technical feasibility of these options. 

24 

 
 
 
                                                            
Further to the technical statement, there are currently no viable non-metallic alternatives 
known for the small metallic coins. Any move to non-metallic solution would require a 
very high financial effort by the industry. Moreover, it would require a complete change 
in the production process, since non-metallic coins cannot be minted on the standard coin 
presses of the mints. 

Others  relevant  actors  have  argued  that  substantial  savings  could  be  made  by  changing 
the  composition  of  the  euro  cent  coins  to  aluminium  with  some  percentages  of 
magnesium.  It  is  reported  that  it  could  potentially  reduce  the  costs  by  45-50%  in 
comparison with the current copper-plated steel. A recent study undertaken for the United 
States Mint also highlights aluminium and steel, but also added zinc as leading alternative 
candidates to reduce the costs of coinage.34  

Any  change  in  the  composition  of  the  euro  cent  coins  would  require  technical  in-depth 
studies  and  also  extensive  testing  in  collaboration  with  blank  producers  and  other 
technical  partners  and  stakeholders.  In  addition,  it  would  also  require  an  amendment  to 
the EU regulation on technical coin specifications. In case a change in composition would 
change  the  colour  of  the  coins,  there  would  be  the  need  for  a  public  information 
campaign in order to inform the wider public thereof.  

It  can  be  concluded  that  there  is  room  for  cost  savings,  although  views  on  alternative 
compositions of the 1 and 2 euro cent coins and the size of the potential cost reductions 
diverge. Nevertheless, the impact on the overall costs would remain relatively limited as 
the cost of the raw material constitutes only a minor part of the total costs of the finished 
product.  Consequently,  several  euro  area  Member  States  would  remain  confronted  with 
negative seigniorage on these small coins, even after a change in their composition. 

2.2.  Reducing issuance costs by increasing efficiency of coin production 

An important second option to reduce cost would focus on the coin production process. 
The earlier analysis of the cost factors of the issuance of the 1 and 2 euro cent coins has 
shown that the substantial variation in coin production costs cannot be explained by the 
costs of the raw material or the blank production process but should rather be attributed to 
the final production process of the coins (i.e. minting) that is undertaken by the national 
mints of the euro area. However, further analysis would be needed to investigate whether 
the variation in costs among national euro area mints is caused by the differences in the 
labor  and/or  capital  costs  involved  in  the  final  coin  production  process  or  whether  it  is 
related to potential inefficiencies of specific aspects of the production process.  

34   Concurrent  Technologies  Corporate,  31  August  2012,  Alternative  Metals  Study,  Final  Report.  In  the 
study,  a  very  thorough  assessment  is  undertaken  to  assess  the  potential  use  of  alternative  metals 
covering issues such as the cost of the material, the technical properties of material, the environmental 
impacts and including also coin striking trials on the sets of alternative candidate materials. Most of the 
analysis focused on higher denomination coins (e.g. 5 dollar cent, 25 and 50 dollar cent, 1 dollar coin) 
whereby  one  of  the  main  concerns  was  the  potential  impact  a  change  in  composition  might  have  on 
vending machines and weight-based coin acceptance equipment. Rather often, the potential savings to 
be  made  by  the  US  Mint  were  overshadowed  by  the  additional  costs  incurred  by  the  coin  handlers. 
With  regard  to  the  1  dollar  cent  coin,  the  study  concluded  that  copper-plated  steel  1  cent  coins  (i.e. 
composition of 1 euro cent coin) would offer no costs savings from the incumbent copper-plated zinc 1 
cent coin and no other alloys matched the required specifications for the coin. 

25 

 
 
 
                                                            
A systematic in-depth analysis of ways to enhance the efficiency of the coin production 
process has for example taken place in the context of a recent study prepared for the US 
in 2012. The first part of the study involved investigating whether changes in production 
technology,  in  the  machinery  and  methods  used  to  produce  coins  could  be  expected  to 
achieve  costs  savings.  The  second  part  was  a  detailed  analysis  of  circulating  coin 
production by the US mints in Philadelphia and Denver with the differences in production 
practices  between  the  two  mints  investigated.  The  US  study  concluded  that  there  was 
room for some improvements with regard to efficiency. However, it did not foresee any 
forthcoming means of markedly improving the coin production process. Finally, the study 
interestingly  noted  that  the  impact  of  using  alternative  metals  for  coinage  could  have 
significant effects on the production efficiency (e.g. lower temperature might be needed 
for coinage). 

It has to be understood that the continued issuance at reduced issuance costs cannot tackle 
the other costs related to the circulation of coins (such as the cash handling costs) and the 
problem of hoarding. The over-production of 1 and 2 euro cent coins to compensate loss 
would  have  to  continue  under  the  scenario  of  continued  issuance  at  reduced  issuance 
costs. However, in case both options (i.e. change in composition and enhanced efficiency 
of  production  process)  would  be  fully  implemented,  the  negative  seigniorage  related  to 
the  issuance  of  the  1  and  2  euro  cent  coins  could    be  significantly  reduced,  if  not 
eliminated. 

III.  TWO SCENARIOS OF WITHDRAWAL OF THE 1 AND 2 EURO CENT 

COINS 

1.  Scenario  of  withdrawal  with  loss  of  legal  tender  ("Quick  withdrawal 

scenario") 

Under  this  scenario,  the  issuance  of  1  and  2  euro  cent  coins  is  stopped  and  the  coins 
would be withdrawn from circulation. Questions on the active withdrawal scenario with 
loss  of  legal  tender  were  addressed  to  all  groups  of  key  stakeholders,  both  public  and 
private. However, only a relatively small group of key stakeholders answered them and 
provided  observations  on  the  withdrawal  scenario.  The  stakeholders  replying  to  the 
questionnaire in general provided answers that applied equally to the 1 and 2 euro cent 
coins.  It  appears  that  there  is  generally  no  need  to  differentiate  between  those  two 
denominations when it comes to the practicalities of their potential abolition. 

1.1.  Economic implications 

1.1.1.  Inflation: real or perceived? 

A  substantial  concern  raised  by  stakeholders  is  the  inflation  that  might  occur  under  the 
withdrawal  scenario  of  the  two  smallest  euro  coin  denominations.  It  is  feared  that  the 
abolition of the 1 and 2 euro cent coins could lead to price increases including through 
the  application  of  rounding  rules.  When  it  comes  to  inflation  in  this  context,  it  is 
important to distinguish between the real measured inflation and the perceived inflation. 
While  inflation  can  be  measured  based  on  empirical  data,  perceived  inflation  is  much 
more  difficult  to  assess  and  explain  as  it  mostly  originates  from  expectations  and 
externalities. 

26 

 
 
 
The  distinction  between  real  and  perceived  inflation  has  also  been  important  in  the 
context of the euro changeover in 2002 and provides evidence of what might occur in the 
context of this analysis. In analogy with the Euro changeover, the withdrawal of the 1 and 
2 cent coins involves a change in the existing denomination of coins. In both cases, this 
might cause fear that there could be an impact on inflation as well as on the perception of 
inflation.  

More than five years after the introduction of euro banknotes and coins, polls revealed a 
widespread perception that the euro has led to higher inflation. In a Eurobarometer poll of 
autumn 2006, more than 90% of respondents in the euro area considered that the euro had 
"added to the increase of prices" in the past 5 years. However, further analysis of the Euro 
changeover  showed  that  inflation  perceptions  might  deviate  significantly  from  actual 
inflation. Before and after the Euro changeover took place on 1 January 2002, there was a 
strong  belief  in  the  public  that  prices  increased  substantially.  This  opinion  was  very 
persistent, even though inflation measurements provided different results and proved the 
opposite.  

Inflation perception might be driven by a broad sense of cost of living. It might also be 
dependent on psychological factors with a key role for people's expectations. At the time 
of the euro changeover it was argued that consumers' inflation perceptions were mainly 
formed  on  the  basis  of  an  "out-of-the-pocket"  expenditure.  Incidental  price  increases  in 
frequently purchased goods, like for example for food, could have led to the impression 
of a general price increase. Although the annual HICP inflation rate in 2002 was slightly 
below inflation in 2001, people's perceptions of inflation increased significantly with the 
euro cash changeover and, in a number of Member States, remained well above measured 
inflation thereafter. 

Chart 13 

1.1.1.1. View of the European Central Bank and euro area Member States 

According  to  the  European  Central  Bank,  the  abolition  of  the  1-  and  2-euro  cent  coins 
and a rounding to the nearest 5 euro cent in total cash payments would not be expected to 
have a noticeable impact on inflation measures. The following considerations were taken 
into account in assessing the possible impact on price stability. 

27 

 
 
 
 
Consumer  price  inflation  in  the  euro  area  is  measured  by  the  'Harmonised  Index  of 
Consumer Prices' (HICP). It is compiled by Eurostat and the national statistical institutes 
in accordance with harmonised statistical methods. The HICP aims to be representative of 
the developments in the prices of all goods and services available for purchase within the 
euro area for the purposes of directly satisfying consumer needs. It measures the average 
changeover time in the prices paid by households for a specific, regularly updated basket 
of  consumer  goods  and  services,  purchased  by  means  of  directly  conducted  monetary 
transactions. In the HICP, the statistical authorities take the quoted (non-rounded) prices 
into account when calculating the price indices. Hence, as long as the abolition of coins 
does not lead to changes in the quoted prices of individual goods and services, measured 
price inflation should not be affected.  

The 'Deflator for Private Consumption' is another measure to determine price changes in 
consumer goods and services. In contrast to the HICP, it is based on actual and imputed 
expenditures  of  households.  Whereas  the  HICP  refers  to  a  fixed  basket  of  consumer 
goods  and  services,  the  private  consumption  deflator  takes  into  account  consumers' 
changing  consumption  habits  due  to  price  changes.  According  to  the  European  Central 
Bank,  when  computing  the  'Deflator  for  Private  Consumption',  statistical  authorities 
consider  the  actual  amounts  paid.  However,  as  rounding  to  nearest  5  cents  would  only 
apply  to  final  cash  payments  and  not  prices  for  individual  items,  there  should  be  no 
systematic bias on the summation and therefore on the private consumption deflator. 

An issue however would arise if the abolition of 1 and 2 cent coins led to the quoted price 
being rounded to the nearest 5 cents on individual items. The withdrawal of 1- and 2-euro 
cent  coins  could  provide  an  opportunity  for  producers  and  retailers  to  round  up  also  a 
broader  set  of  individual  quoted  prices,  and  could  then  lead  to  some  increase  in  the 
general price level and - at least one-off - to higher inflation.  

Irrespective of the impact of abolishing 1 and 2 euro cent coins on actual prices, could be 
an impact on the inflation expectations of consumers. The rounding of final cash sums or 
individual  prices  might  lead  consumers  to  expect  upward  rounding  or  outright  price 
increases also in the future. This might then influence inflation expectations in the same 
manner as the euro cash changeover. This holds in particular if the rounding affects items 
that are frequently purchased and typically paid in cash. However, in retrospect, it should 
be  noted  that  the  cash  changeover  did  not  appear  to  give  rise  to  more  fundamental 
changes in price and wage expectations. 

A  majority  of  euro  area  Member  States  do  not  expect  a  withdrawal  of  1  and/or  2  euro 
cent coins to have any significant impact on price stability for two reasons: 

•  First,  a  number  of  studies  have  demonstrated  that  the  inflationary  effects  would  be 
very limited35. According to a Belgian study in 2005, the estimated impact on prices in 
Belgium would be a maximum of 0.11 %. In Slovakia, a study on inflationary impacts 
of the withdrawal of 10 and 20 Haller coins concluded that the cessation and related 
rounding  rules  would  have  only  limited  inflationary  effects  of  less  than  0.01%. 
According  to  the  interim  results  of  a  pending  cash  study  conducted  on  behalf  of  the 

35  Ehrmann M. (2006), "Rational inattention, inflation developments and perceptions after the euro cash 
changeover", European Central Bank, Working paper no. 588. INSEE (2007), "La mesure du pouvoir 
d'achat et sa perception par les ménages" in "Rapport sur les comptes de la Nation de 2006".  

28 

 
 
                                                            
Bundesbank36,  which  has  yet  to  be  published,  the  inflationary  effect  due  to  the 
introduction  of  a  rounding  rule  appears  to  be  very  small.  In  the  case  of  commercial 
rounding of the sum on the cash receipt, the rounding-up and rounding-down effects 
largely  balance  each  other  out.  Even  in  a  scenario  where  retailers  round  up  all  final 
transaction amounts to the nearest 5 cent (e.g. EUR 1,79 to EUR 1.80 but also EUR 
1,81 to EUR 1,85 or EUR 1,86 to 1,90 EUR), the one-off effect of the price increase 
would amount to no more than around 0,1%. 

•  Second, the experience  in  FI and the NL has  shown  that  the  impact  of  inflation  was 
minimal or non-existent. The Finnish approach to rounding on cash payments did not 
apparently  cause  inflationary  effects.  In  this  case,  the  rounding  to  the  closest  5  euro 
cent is applied to the final cash sum only (not to individual prices). Based on statistical 
theory,  there  should  be  no  inflationary  impact  if  the  number  of  goods  purchased  is 
random. 

Some  euro  area  Member  States  indicated  that  the  withdrawal  of  1  and/or  2  euro  cents 
coins  could  have  a  very  limited  and  transitory  effect  on  the  price  level.  In  light  of  the 
competitive  structure  of  trade  and  distribution  sectors,  commodity  prices  could  be 
rounded upward more frequently than downward. This would also lead to a perception of 
a higher inflation, particularly on low-priced units and/or frequently purchased products. 
Furthermore there would be a limited inflationary risk if the producers and retailers round 
up  a  broader  set  of  prices,  which  could  then  lead  to  some  increase  of  the  general  price 
level or have a negative impact on inflation expectations.  

Several  Member  States  suggested  potential  accompanying  measures  that  could  reduce 
inflation or the perception of inflation. First, the introduction of an appropriate rounding 
rule  should  normally  have  no  impact  on  price  stability  as  the  upward  and  downward 
rounding  would  even  each  other  out.  In  contrast,  the  rounding  of  individual  prices  is 
deemed  to  have  a  negative  impact  on  price  stability.  Second,  Member  States  called  for 
taking  measures  to  fight  perceived  inflation  by  countering  possible  negative  perception 
by the public through setting up a targeted information campaign. A clear message to the 
public, consumers and retailers is important in view of informing them that there are no 
reasons  to  fear  inflationary  effects.  However,  the  cost  dimension  of  such  information 
campaigns would have to be taken into account when weighing the costs and benefits of a 
potential withdrawal. 

1.1.1.2. 

View of consumer and retailer associations 

Consumer  associations  have  mixed  views  regarding  the  impact  on  price  stability,  if  1 
and/or  2  euro  cent  coins  were  withdrawn.  In  their  view,  a  potential  impact  on  inflation 
cannot be excluded. This impact could be relatively high if prices of individual items and 
not  total  amounts  of  payments  were  rounded.  One  consumer  association  indicated  that 
there is likely to be a significant impact on prices of daily products, because many prices 
would need to be revised and certainly many economic operators would take advantage 
of the situation to increase prices. This could have a negative impact particularly on lower 
income and other vulnerable consumers. 

36  http://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK/2013/2013_01_21_summary 

_monthly_report_january.html 

29 

 
 
 
                                                            
Retailers  are  divided  with  regard  to  the  potential  withdrawal  of  the  1  and  2  euro  cent 
coins.  The  use  of  these  coins  constitutes  a  cost  factor  for  them.  While  they  provide 
consumers  with  the  relevant  small  value  coins,  the  consumers  rarely  use  these  coins  to 
pay. In case of a withdrawal of these coins, it is crucial for the retailers that this should be 
accompanied  by  the  appropriate  changes  in  the  EU  legal  framework  including  the 
introduction of the appropriate rounding rules. Retailer associations suggested a rounding 
of  total  cash  payments  to  the  nearest  multiple  of  5  or  10.  It  was  noted  that  in  the 
Netherlands  and  Finland,  the  impact  on  prices  seemed  to  have  remained  very  limited 
possibly  because  of  the  balancing  effect  of  rounding  up  and  down.  Rounding  on 
individual items should be avoided because it is likely to increase inflation. One retailer 
association  emphasised that it  needed to clarify whether potential rounding rules would 
be  applied  only  to  cash  payments  or  also  to  electronic  payments;  this  could  lead  to 
confusion for the consumer because different amounts might have to be paid depending 
on the payment method.  

A  representative  from  a  large  retail  sector  from  a  programme  country  emphasised  that 
they  are  against  the  withdrawal  of  the  coins  at  this  moment  in  time.  In  the  current 
economic  crisis,  consumers  would  be  very  suspicious  with  regard  to  any  change  in  the 
coin denomination structure suspecting that the aim of the operation would be to increase 
prices.  Once  the  economy  has  recovered,  a  withdrawal  could  be  envisaged  to  be 
accompanied by an important communication campaign to inform consumers. 

1.1.2.  Impact on state income: tax revenues and seigniorage 

When it comes to seigniorage, the withdrawal of the 1 and 2 euro cent coins is likely to 
have a mixed impact on the income of the Member States in the euro area. Around half of 
the euro area Member States is confronted with negative seigniorage in relation to their 
issuance  of  1  and  2  euro  cent  coins.  In  those  Member  States,  substantial  savings 
sometime up to 4 times the face value could be made by abolishing the 1 and 2 euro cent 
denominations. However, in other euro area Member States the seigniorage of those coins 
is  still  positive  and  this  positive  state  income  stream  would  be  lost.  From  this  specific 
perspective, rather than abolishing the coins, addressing the high production costs in the 
euro area Member States confronted with negative seigniorage seems a better solution. It 
would  reduce  the  losses  in  those  countries  while  safeguarding  the  positive  seigniorage 
from those euro area Member States that can produce with lower costs. 

In  case  of  withdrawal  of  the  1  and  2  euro  cent  coins,  probably  more  coins  of  the 
denominations following next on the denomination scale, in particular the 5 and 10 euro 
cent  coins,  would  be  needed.  Given  the  higher  face  value  of  those  coins  (issued  at 
positive  seigniorage),  the  seigniorage  from  these  coins  would  increase.  This  would 
therefore have a positive yet probably modest impact on the state income. 

Since it is envisaged that there are no inflationary effects linked to the withdrawal of the 
2 smallest denominations, there should normally also be no impact on indirect taxation, 
i.e. VAT. In case of withdrawal, most likely rounding rules would apply to the final sum 
with rounding up and rounding down equalling each other out thereby have no impact on 
the overall price level and consequently the VAT receipts.  

30 

 
 
 
 
1.1.3.  Impact on private stakeholder business 

The  analysis  of  the  economic  impact  of  the  withdrawal  scenario  examines  the 
consequences  for  economic  operators  including  private  companies  and  businesses.  For 
the purpose of this analysis, Mints are considered economic operators. Even though some 
Mints  are  public  companies  and  fulfil  certain  extent  tasks  in  the  public  interest,  they 
function like private companies in the market. Against this background, Mints, as well as 
various retailers, banking and cash in transport associations were asked to provide their 
observations  on  the  question  of  what  kind  of  impact  the  cessation  of  the  smallest  euro 
coin denominations would have in their field of economic activity.  

None of the banking associations took a position and submitted a reply to this question. It 
is understood that provision of cash does not come for free and it cannot be excluded that 
for banks the provision of certain (coin) denominations to clients is less profitable than 
the provision with others. However, it appears that banks as cash providers may not see 
themselves in the driving seat of the discussion on 1 and 2 euro cent coins. The role of 
banks in cash management and procession is to provide euro cash users with cash as such 
and independently of the range of legal denominations. The question whether the one or 
the  other  denomination  requested  by  the  users  is  (dis)advantageous  from  the  bank's 
business and profitability point of view seems to be of  less interest for banks as they in 
any case pass the costs of provision of cash on to their customers. 

The cash transportation business highlighted the positive effect of the withdrawal of both 
denominations. Given their shape and high quantity, the 1 and 2 euro cents are difficult to 
process  technically.  What  is  more,  margins  for  processing  these  two  denominations  are 
low  compared  to  the  higher  value  coins,  given  that  in  some  countries  income  deriving 
from  coin  processing  is  proportional  to  the  deposit  value  rather  than  to  the  number  of 
coins  or  the  weight  of  the  coins.  Other  positive  impacts  of  a  withdrawal  include  less 
weight to be handled by the coin processing infrastructure (machines, vehicles) and staff 
as  in  total  less  coins  would  need  to  be  handled  and  reduced  costs  related  to  the 
maintenance of coin sorting and packaging machines as less machines would be needed. 

While processing small denominations is a necessary business -as 1 and 2 euro cent coins 
are  legal  tender  and  actually  used  -  it  generates  low  profits.  Resources  in  the  cash 
processing  business  could  probably  be  used  more  effectively  in  other  cash  processing 
activities  which  generate  higher  profits  due  to  higher  margins.  On  the  other  hand,  the 
cash transport association points out that with a lower volume of delivery, processing and 
transportation there would certainly be a loss in turnover and margins which could trigger 
employee  layoffs  and  financial  risks  due  to  severance  pay  for  employee  terminations. 
Furthermore, additional costs could arise from the excess of packaging material for 1 and 
2 euro cent coins and the necessary resetting of production lines.  

While  not  being  able  to  quantify  the  exact  amount,  the  retailers  signalled  that  the 
withdrawal of the relevant coins would clearly lead to cost savings. It was reported by a 
large retailer that the costs of obtaining a set of fifty 1 cent coins costs the 50 cents plus 
an extra 40 cents. In addition to those cost savings, the handling and transportation costs 
related  to  the  1  and  2  euro  cent  coins  would  also  be  reduced  even  if  they  could  not 
provide quantitative data in this regard. Retailers indicated that the withdrawal scenario 
could  risk  provoking  a  negative  attitude  from  consumers  in  relation  to  the  fear  for 
inflation.  However,  retailers  were  positive  that  this  problem  could  most  likely  be 

31 

 
 
 
 
addressed by focused public relations campaigns informing citizens that the withdrawal 
of the coins and rounding would not impact on inflation. 

As  regards  the  Mints,  the  question  of  the  impact  of  the  ceasing  coin  issuance  was 
submitted with a focus on their field of activity with regard to the variables time and costs 
(e.g.  termination  of  long-term  contracts  on  supply  of  blanks)  under  the  withdrawal 
scenario. Generally  speaking,  the  Mints stated that the cessation  of issuance of 1 and 2 
euro cent coins would negatively impact on their business. The 1 and 2 euro cents already 
minted  would  have  to  be  destroyed,  causing  additional  costs  including  the  costs  of 
melting the coins. All Mints except one, however, seem to face no problems with running 
contracts on the supply of blanks. The contracts generally do not run for more than 12 to 
18 months, which – as a conclusion for this study – does not appear to be a problem as 
the  preparation  of  the  possible  withdrawal  scenario  would  take  more  or  less  the  same 
time. 

A number of mints emphasised that 1 and 2 euro cent coins represent more than 50% of 
their  production  of  coins.  Over  capacity  in  terms  of  production  under  the  possible 
withdrawal  scenario  would  imply  the  closing  of  production  units,  with  a  negative 
financial impact on those Mints and causing workers to lose their jobs. However, it could 
be  considered  whether  the  freed  capacities  could  not  be  used  to  concentrate  on  more 
lucrative business. For other Mints, ceasing the issuance of 1 and 2 euro cent coins would 
have a relatively small impact on their field of business. The impact would be temporary 
and occur mainly during the transition period.  

1.2.  Social impact 

Observations made by stakeholders also touched indirectly upon the general social impact 
of  a  withdrawal  scenario.  As  an  example,  stakeholders  pointed  out  that  fair  and  easy 
rounding  rules  would  have  to  be  introduced  and  applied  only  to  the  final  sum  of  the 
payment.  It  also  appears  that  in  order  to  be  accepted  widely,  the  withdrawal  scenario 
would  have  to  be  prepared  well  in  advance  and  be  accompanied  by  an  appropriate 
information campaign. Moreover, it should rather be carried out at a convenient moment 
of  economic  and  financial  upswing,  since  citizens  are  currently  very  sensitive  to  plans 
and initiatives which could be perceived as affecting their financial situation because of 
the difficult general economic environment. 

From a social point of view, the withdrawal scenario could negatively impact on social 
fund raising and donations. As stated above, in some countries supermarkets have been 
inviting customers to sporadically donate "red coin" change at the cash desk for charity. 
Although  customers  may  want  to  donate  more  than  "red  coin  change",  the  withdrawal 
scenario  would  eliminate  charity  donations  of  1  and  2  euro  cent  coins.  It  would  be 
difficult  to  quantify  this  impact  on  the  overall  amount  of  donations,  but  given  the  low 
face  value  of  the  1  and  2  euro  cent  coins  "lost  chances"  for  donations  are  likely  to  be 
marginal. What  is more,  the  costs of  handling and processing low value coin donations 
(relatively low sums, relatively high amount of coins, probably long collection intervals) 

32 

 
 
 
 
would have to be factored into the calculation of the costs/benefits of this kind of social 
fund raising and charity.37 

Charity  associations  could  probably  assist  (central)  banks  and  other  cash  processing 
bodies with the withdrawal of the 1 and 2 euro cent coins (e.g. through "kettle actions" in 
shopping malls and streets). The reimbursement of the collected coins could be injected 
into charity projects rather than be returned to the state while causing a one-off beneficial 
effect  of  the  withdrawal.  From  a  state  income  and  costs  of  withdrawal  point  of  view, 
collecting of coins through charity while renouncing to collected receipts may probably 
be more cost efficient for Member States than involving (exclusively) costly professional 
cash procession bodies and business in the withdrawal and keeping the receipts. 

The social impact of the withdrawal scenario on tipping in restaurants and bars is likely to 
be irrelevant, given that in general prices for beverages and prepared meals in locations 
with service are not fractional. What is more, customers really willing to tip are unlikely 
to give 1 or 2 euro cent as overall tip or to round up the total sum to the next 5 or 0 cent 
only. 

1.3.  Impact  on  other  coin  denominations  and  the  use  of  other  means  of 

payment 

Under the withdrawal scenario, the number of euro coin denominations would drop from 
8 to 6 denominations. In  their  answers to the questionnaire on whether to abolish the 1 
and/or  2  euro  cent  coin,  the  stakeholders  mostly  did  not  take  a  different  view  on  the 
potential  withdrawal  of  the  1  euro  cent  coin  than  that  they  expressed  on  the  potential 
withdrawal  of  the  2  euro  cent  coin.  Therefore,  the  more  likely  potential  withdrawal 
scenario  would  be  the  abolition  of  the  two  lowest  denominations.  Against  this 
background, the 5 euro cent coin would become the lowest denomination. 

The Member States and the central banks were questioned about a potential impact of the 
1 and 2 euro cent abolition on the other coins denominations such as the 5 euro cent coin. 
The overall view is that the demand for 5 euro cent coins but also for 10 euro cent coins 
would increase and that the demand for 5 euro cent coins would increase more than the 
demand  for  10  euro  cent  coins.  Member  States  and  central  banks  find  it  difficult  to 
quantify  the  scale  of  such  an  increase,  as  the  demand  for  the  coins  would  depend  on 
rounding  policies  and  price  pointing.  Central  banks  and  Member  States  report  that  the 
increase is expected to be small, in particular because rounding would apply to the overall 
due sum rather than to each item to be purchased and because rounding would have the 
effect to even out the demand for 5 and 10 euro cent coins. 

37   Figures  from  examples  in  Europe  are  not  available.  As  an  example  from  outside  Europe,  a  recent 
"kettle  coin  campaign"  during  the  Christmas  period  in  Ottawa  (Canada)  brought  receipts  of  around 
150.000 € (coins of all Canadian dollar denominations). The charity organization had to face around 
1,5% of the receipts (ca. 2.300 €) to cove r related cash processing and bank services. 

33 

 
 
 
 
                                                            
1.4.  Implementing measures accompanying a possible withdrawal scenario 

1.4.1. 

Legislative act by the European legislator  

As  a  prerequisite  of  a  possible  withdrawal  scenario,  relevant  secondary  EU  law  would 
have to be amended. The determination of the denomination of euro coins is the exclusive 
competence  of  the  European  Union  pursuant  to  Article  128,  paragraph  2  of  the  TFEU. 
The  withdrawal  scenario  would  imply  the  abolition  of  the  1  and  2  euro  cent 
denominations.  Therefore,  Council  Regulation  (EC)  No  975/98  which  laid  down  the 
details  of  the  euro  coin  denominations  and  set  the  number  of  denominations  at  eight 
would have to be amended. 

Under  the  withdrawal  scenario,  it  is  expected  that  fractional  prices  would  continue  to 
exist.  Exact  cash  payment  of  the  final  sum  of  fractional  prices  would  not  always  be 
possible anymore. Therefore, legally binding rounding rules for the euro area would need 
to  be  introduced,  most  likely  based  on  Article  133  TFEU  following  the  ordinary 
legislative procedure and after consultation of the ECB. On grounds of the principles of 
equal treatment, non-discrimination and fair competition, rounding would have to apply 
to all means of payment it being cash or non-cash payments.  

1.4.2. Implementing measures to be taken by public key stakeholders 

The  possible  withdrawal  scenario  would  affect  every  cash  user  and  thereby  all  citizens 
and key stakeholders in the euro area. As an example, with the 1 and 2 euro cent coins 
ceasing to be legal tender in the euro area, citizens would try to spend their (hoarded) 1 
and  2  euro  cents  as  much  as  possible  in  retailer  transactions  (e.g.  in  supermarkets)  or 
return them to the banks before the expiry date is reached. Regardless of the impact of the 
withdrawal  on  everyone's  lives,  key  stakeholders  with  public  and  private  tasks  would 
have to play a pro-active role and need to take implementing measures that accompany 
the withdrawal of the coins. 

Against  this  background,  three  guiding  principles  appeared  to  be  important  for  a 
successful withdrawal: 

•  Timely preparation of implementing measures and information of the public 

•  Central banks and banks to play a pivotal role in the practical withdrawal 

•  Appropriate duration of the implementing measures  

Any withdrawal of 1 and 2 euro cent coins including cessation of further issuance would 
have to be organised in the view of ensuring a proper and adequate implementation. The 
central  banks  supported,  where  necessary,  by  the  public  administration  would  have  to 
organise  the  physical  withdrawal  of  the  1  and  2  euro  cent  coins.  In  addition,  Member 
States  would  have  to  decide  which  accompanying  measures  to  take  to  prepare  the 
withdrawal from a socio-economical (public campaign to inform citizens, administration 
and business) logistical and legal point of view.  

34 

 
 
 
On the side of public key stakeholders, treasuries, central banks and the ECB would play 
a  pivotal  role  in  preparing  the  withdrawal,  including  considering  a  wide  range  of 
activities with regard to timing and appropriate information of the public. 

The  key  stakeholders  stated  that  in  addition  to  the  preparation  of  the  mere  physical 
withdrawal of the 1 and 2 euro cent coins preparatory measures would be necessary. Such 
measures should consist of appropriate publicity campaigns which inform the public on 
the  withdrawal  and  its  ramifications  and  practicalities  as  such.  The  stakeholders 
underlined that the public should be informed with the aim of reassuring consumers and 
retailers  that  there  would  not  be  any  reason  to  fear  inflationary  effects.  Some  Member 
States  referred  to  their  experience  with  regard  to  the  abolition  of  small  national 
denominations and advised to discuss the possible abolition of the 1 and 2 euro cent with 
consumers, retailers and banks prior in preparation of the withdrawal campaign.  

As to the duration of the accompanying measures, several Member States pointed out that 
the  public  information  campaign  should  run  at  least  for  6  months  although  the  overall 
withdrawal  procedure  including  the  application  of  accompanying  measures  would  need 
one or even up to two years.  

the  addressees  of 

Member  States  were  confronted  with  the  key  question  on  the  practical  preparation  of  a 
possible withdrawal scenario and the role their national central banks would play in the 
implementation  Although  none  of 
the  questions  provided 
comprehensive  information  on  how  the  withdrawal  would  have  to  be  organised  in  the 
respective  Member  State,  key  public  stakeholders  tend  to  agree  that  the  withdrawal 
should be carried out as it was done when the national cash was withdrawn in its territory 
at the moment of the euro changeover. Several key stakeholders pleaded for a progressive 
withdrawal  with  instructions  to  the  central  bank  and  commercial  banks  to  stop  further 
issuance  to  customers  and  return  all  stocks  progressively.  Finally,  some  stakeholders 
advocated  for  leaving  the  withdrawal  measures  to  Member  State  discretion  while 
proposing that the Commission should lay down the withdrawal framework such as the 
redemption  time  for  1  and  2  euro  cent  coins  and  leave  the  specific  details  to  the 
individual Member States.  

As to the practicalities of the withdrawal, some of the central banks implied the need to 
adapt the central bank's internal proceedings and IT systems as well as the website and 
public  information  about  the  coins.  Finally,  central  banks  are  of  the  opinion  that  the 
higher  return  of  the  coins  to  the  central  banks  upon  withdrawal  would  imply  a  higher 
demand for storage and logistics in central bank facilities until the melting down of the 
coins. 

None  of  the  central  banks  quantified  the  implementation  measures  of  the  physical  coin 
withdrawal  in  terms  of  money  and  personnel.  The  reason  could  be  that  in  recent  years 
central banks have been outsourcing cash distribution where possible and reducing cash 
handling services to the minimum. Consequently, a large proportion of the physical cash 
withdrawal  would  be  borne  by  the  cash  handling  service  providers  to  which  cash 
distribution has been outsourced rather than by the central banks' own staff and resources. 

As  to  the  question  on  how  long  it  would  take  to  perform  the  implementing  measures, 
central  banks  agreed  that  sufficient  time  must  be  given  to  all  stakeholders  to  prepare 
themselves  and  inform  the  citizens.  On  average,  central  banks  stated  that  the 
implementing  measures  in  general  should  last  at  least  one  year  but  some  central  banks 
considered a two-year period more adequate. In order to carry out the public information 

35 

 
 
campaign  and  provide  for  the  rounding  rules,  central  banks  think  that  one  year  may  be 
sufficient. In general, central banks pointed out that the physical withdrawal would take 
several  years  as  the  1  and  2  euro  cent  coins  would  not  lose  their  qualification  as  legal 
tender,  at  least  not  before  an  appropriate  legal  transition  period  of  several  years  has 
elapsed. 

However, it appears to be difficult to estimate the amount of coins to be returned and to 
calculate and set an appropriate timeframe up-front. None of the central banks were in a 
position to provide observations on how many 1 and 2 euro cent coins are expected to be 
returned.  Some  stakeholders  expect  very  limited  amounts  of  these  denominations  to 
return.  

As  discussed  earlier,  the  1  and  2  euro  cent  coins  have  been  issued  in  high  quantities. 
Moreover,  these  coins  have  been  hoarded  in  high  quantities  in  private  households. 
Nevertheless  retailers  and  above  all  supermarkets  would  be  owners  of  the  largest 
quantities of these denominations as they have to provide change at the cashier. The loss 
rate  of  both  denominations  is  very  high  and  their  face  value  low.  Therefore,  one  may 
probably  expect  a  relatively  low  return  rate.  It  is  envisioned  that  a  citizen  with  a  small 
amount of 1 and 2 euro cent coins in his wallet is unlikely to change the small amount or 
pay  it  into  a  bank  account  at  a  bank  counter  but  use  them  for  payments  in  the 
supermarket. 

1.4.3. Implementing measures to be taken by private key stakeholders  

Similar to public key stakeholders, also private key stakeholders such as banks, retailers 
and cash-in transport industry would have to play a specific role should the 1 and 2 euro 
cent  coins  be  withdrawn.  Therefore,  stakeholders  were  confronted  with  questions  on 
which implementation measure they would consider necessary in their field of business. 
However, only a few private stakeholders who were contacted submitted replies on these 
issues. 

The banking industry highlighted the sensitivity of a withdrawal scenario and called for a 
thorough ex-ante discussion with stakeholders about any implementing measures and the 
various  possible  options  to  put  a  withdrawal  scenario  into  practice.  The  timeline  for 
phasing out the use of 1 and 2 euro cent coins should be considered and an information 
campaign should be developed. Banks pointed out that, in principle, they would have to 
provide  their  customers  with  all  cash  denominations.  The  banks'  costs  to  provide  euro 
coins  would  not  change  significantly  if  one  or  two  denominations  such  as  the  1  and  2 
euro  cent  coins  were  dropped  or  new  coin  denominations  added.  Banks  could  face 
specific  implementation  measures,  for  example  in  the  case  that  the  rounding  rules  for 
cash  payments  would  apply  to  electronic  payments.  In  the  latter  case,  the  banks'  IT-
systems for accounting and for running the coin processing machines would have to be 
adapted. Costs related to those changes would however remain rather limited. 

The  cash  in  transport  business  expects  a  limited  impact  when  involved  in  the  possible 
withdrawal scenario and reported that the withdrawal would imply software and hardware 
modifications to the coin processing machines and some changes in the client reporting 
system. The association believes that the adaptations would require up to six months, but 
some  partners  may  be  in  a  position  to  carry  out  the  modifications  in  only  a  couple  of 
weeks. 

36 

 
 
 
1.5.  Experience with withdrawal of low value coins 

Historical  experience  with  the  abolition  of  small  denominations  in  various  countries 
shows that, namely for reasons of legal certainty, the abolition of a coin denomination is 
usually  accompanied  by  the  withdrawal  of  the  respective  coins.  In  these  circumstances, 
individuals and professional coin users can either exchange the denominations at the bank 
counter or return them directly or via an agent to the central bank. In most cases, and as 
an  incentive  for  fast  and  effective  withdrawal,  the  abandoned  denomination  loses  it 
quality as legal tender at the end of a legally defined transition period. 

In  the  past,  various  European  countries  including  Member  States  which  now  belong  to 
the euro area, abolished and withdrew lower denomination coins. No denominations have 
been  withdrawn  in  the  euro  area  so  far.  The  measures  taken  in  Finland  and  the 
Netherlands to physically limit the circulation of 1 and 2 euro cent coins combined with 
the  use  of  rounding  rules  cannot  be  considered  as  withdrawal.  These  denominations 
continue to be legal tender in the whole euro area including Finland and the Netherlands. 

The  experience  with  the  withdrawal  of  small  denomination  coins  is  not  limited  to 
European countries. Other (Western) countries, including recently Canada, have decided 
to abolish low value coins. 

1.5.1. Euro area Member States prior to the euro changeover  

Some  EU  Member  States  which  became  members  of  the  euro  area  gained  experience 
from the withdrawal of low denomination coins before the euro changeover took place. 
Belgium,  Finland,  Greece,  the  Netherlands  and  Slovakia  withdrew  several  low 
denomination coins from circulation. 

Over  the  years,  amongst  others  the  following  denominations  were  withdrawn  (EUR 
according to conversion rates): BEF 0.25 (EUR 0.006), FIM 0.01 and 0.05 (EUR 0.002 
and  0.008),  GRD  0.05,  0.10  and  0.20  (EUR  0.00015,  0.0003  and  0.0006),  NLG  0.01 
(EUR 0.005), SKK 0.10 and 0.20 (EUR 0.003 and 0.006). 

Luxembourg,  the  Netherlands,  Portugal  and  Spain  changed  the  metallic  composition  of 
their national coin denominations to reduce costs but it is not reported that theses specific 
denominations have been abolished later on. 

1.5.2. Other EU Member States and European countries  

Many low denomination coins have been withdrawn from circulation in countries outside 
the  euro  area,  in  countries  of  the  European  Economic  Area  or  in  other  European 
countries.  

A  long  tradition  of  withdrawal  can  be  noted  in  Scandinavia.  Denmark,  Norway  and 
Sweden  introduced  common  coin  denominations  and  units  of  account  (krone)  in  19th 
century,  when  the  Scandinavian  Monetary  Union  was  built.  Whereas  in  Sweden  and 
Norway  the  lowest  denomination  is  1  krona  today,  the  lowest  denomination  of  50  øre 

37 

 
 
 
 
 
coins remains being legal tender in Denmark. However in Norway and Sweden, the øre is 
only an arithmetical unit, which can be used for quoted prices and electronic payments. 
Furthermore Iceland has withdrawn low denomination coins over the years. 

In  Denmark,  on  separate  occasions  1,  2,  5  and  10  øre  coins  were  removed.  With  the 
abolition of the 25 øre coin in 2008, rounding to the nearest 50 øre was introduced to cash 
payments.  

In  Sweden  1,  2,  5,  25,  10  and  50  øre  coins  were  withdrawn  between  1972  and  2010.38 
The Swedish Riksbank recommended the cessation of 50 øre issuance in 2010, because 
its surveys revealed that two-third of the population considered the 50 øre coins no longer 
necessary. It was assessed that abolishing the 50 øre coin would not have any significant 
effect  on  the  demand  for  other  denominations  of  coins,  but  would  lead  to  a  relatively 
small  increase  in  demand  for  1  krona  coins.  The  costs  of  withdrawal  for  the  Swedish 
Riksbank  were  calculated  at  SEK  10-15  million.  At  the  same  time  new  rounding  rules 
were introduced. Cash payments must be rounded to the nearest krona/or, meaning that 
amounts from SEK 0.01 to 0.49 are rounded down and amounts from SEK 0.50 to 0.99 
are  rounded  up.  In  Sweden  retailers  sent  recently  a  request  to  the  Swedish  Ministry  of 
Finance,  asking  for  clarification  on  the  issue  of  equal  rounding  rules  for  electronic 
payments,  because  some  retailers  apply  rounding  rules  for  all  kind  of  payments,  which 
might have an impact on competition. 

Over the years, the Scandinavian countries also changed the metallic composition and the 
size of coins using iron, bronze, nickel-bronze, cupro-nickel, copper, zinc or tin in order 
to reduce costs. With a view to inflation, these attempts were considered insufficient to 
solve  the  problems  of  low  denominated  coins  over  time.  Therefore  countries  started  to 
withdraw coins with the lowest denominations. Rounding rules for cash payments were 
introduced, which apply only to total amounts of payments and not to the price of each 
individual article. 

In  1984,  the  United  Kingdom  removed  the  legal  tender  status  of  GBP  0.005.  .  In 
Switzerland, the second lowest denomination, CHF 0.02 was withdrawn from circulation 
in 1978. It was followed by the cessation of the lowest denomination, CHF 0.01, in 2007. 

Poland is currently considering withdrawing the two lowest denomination coins (1 and 2 
grosz) to save money as the production costs seem to be much higher than the face value 
of these coins. 

1.5.3. Withdrawal experience outside Europe  

Several countries have ceased to produce or have removed from circulation their lowest-
denomination coins as they became less used for transactions and more costly to produce.  

•  Canada 

A recent example is the withdrawal of 1 cent coins (EUR 0.007) in Canada which took 
effect  in  February  2013.  In  2010  and  2011,  the  Government  paid  the  Mint  CAD  120 

38   The Swedish case shows that the order of withdrawals over time does not necessarily have to follow 
the denomination scale. The 25 øre coin was withdrawn seven years before the withdrawal of the 10 
øre coin in 1992. 

38 

 
 
                                                            
million (EUR 92 million) for coins and earned CAD 131 million (EUR 101 million) on 
the subsequent sale of these coins to financial institutions at face value. However, the cost 
to produce a Canadian 1 cent coin ('penny') exceeds its face value by about 0.6 Canadian 
cent. The Canadian Government calculated that the cost of supplying Canadian cents to 
the economy is about CAD 11 million (EUR 8 million) per year. 

A  study  carried  out  in  Canada  estimated  that  the  economic  costs  of  maintaining  1  cent 
coins,  including  direct  production  costs  and  indirect  costs  to  financial  institutions, 
retailers  and  consumers,  amounted  to  CAD  150  million  (EUR  116  million)  in  2006. 
Financial  institutions  together  handled  more  than  nine  billion  pennies  per  year,  which 
translated into an annual cost of at least CAD 20 million (EUR 15 million).39  

Against  this  background,  the  Government  of  Canada  announced  in  its  2012  Economic 
Action Plan its intention to withdraw the Canadian 1 cent coin from circulation due to its 
low purchasing power, its rising  cost of  production relative to face value, the increased 
accumulation  of  1  cent  coins  by  Canadians  in  their  households,  environmental 
considerations,  and  the  significant  handling  costs  the  penny  imposes  on  retailers, 
financial institutions, and the economy more generally. Due to inflation, the purchasing 
power of the 1 cent coin has eroded over the years, retaining only about one-twentieth of 
its original purchasing power. 

The  Royal  Canadian  Mint  ceased  minting  of  Canadian  1  cent  coins  on  4  May  2012.  A 
transition date of 4 February 2013 has been set after which the penny will no longer be 
issued. However these coins will continue to be Canada's smallest unit for the pricing of 
goods  and  services.  Rounding  is  introduced  for  cash  payments  but  payments  by  other 
means, such as cheques, credit cards and debit cards, will remain to be made to the exact 
amount. 

Withdrawing Canadian 1 cent coins from circulation is expected to save the Canadian tax 
payers  around  7,5  million  EUR  production  costs  a  year.  The  withdrawal  is  likely  to 
increase slightly the demand for higher-denomination coins, such as CAD 0.05, 0.10 and 
0.25. This would increase net coinage revenues as these coins are worth more than they 
cost  to  produce.  Withdrawing  the  penny  shall  bring  economic  and  financial  savings  to 
financial  institutions,  retailers  and  consumers.  In  addition  it  is  expected  to  bring  some 
environmental benefits.  

Over  the  past  five  years,  around  7,000  tons  of  pennies  were  produced  and  distributed 
annually from the Mint's plant in Winnipeg to the rest of the country. The withdrawal will 
reduce the annual use of base metals by the Mint in the production process. Metals from 
existing  pennies  will  be  recycled  for  use  in  other  products.  Ceasing  the  production  of 
pennies  will  save  energy  that  is  currently  used  in  the  production,  transportation  and 
distribution of pennies. 

•  USA 

In  the  United  States,  a  long  debate  has  started  on  the  future  or  possible  cessation  of 
issuance  of  1  cent  coins.  According  to  recent  statements,  however,  there  seems  to  be  a 

39  Study carried out by the Desjardins Group (Canada) in 2006. 

39 

 
 
                                                            
preference to use an alternative material40 to produce the coins rather than to opt for the 
withdrawal as currently taking place in Canada. 

•  Other countries 

Many  other  countries  outside  the  EU  and  North  America  have  withdrawn  low 
denomination coins. For example (EUR according to recent conversion rates): 

Chart 14 

•  Australia: withdrew AUD 0.01 and 0.02 (EUR 0.008 and 0.016) from circulation 

in 1992. 

•  Brazil: stopped issuing BRL 1.00 (EUR 0.37) coins in 2005. 
• 
•  New  Zealand:  withdrew  NZD  0.01,  0.02  and  0.05  (EUR  0.006,  0.01  and  0.03) 

Israel: stopped issuing ILS 0.01 and 0.05 (EUR 0.002 and 0.004) by 2008. 

from circulation by 2006. 

1.6.  Continued issuance or cessation 

Confronted with the question whether issuance of 1 and 2 euro cents should be continued 
or ceased, three EU Member States stated that they are in favour of continuation whereas 
four EU Member States stated that they prefer cessation. Fifteen EU Member States did 
not provide any answer to this question, it being understood that some EU Member States 
did  not  provide  any  answer  to  any  of  the  (other)  question  raised  in  the  questionnaire. 
While this provides a first indication, no definite conclusions can be made on the basis of 
this partial result. 

Also  European  consumer  associations  were  invited  to  take  a  position  on  continued 
issuance or cessation. One of the two consumer associations that replied to the question 
was in favour of the continued issuance of the small coins. The other one chose the option 
to  not  provide  an  answer.  The  only  retailer  association  that  replied  also  chose  not  to 
answer the question. These results leave us with an unclear reply to this crucial question.  

In  order  to  explore  the  citizens'  opinion  on  continued  issuance  or  cessation,  the 
Commission's  Eurobarometer  could  be  used  as  an  indicator,  given  that  it  gives  useful 
information  on  the  EU  citizens'  views  on  the  current  euro  coin  denominations.  It  also 
provides  information  on  which  euro  coin  denominations  citizens  would  most  like  to  be 
removed.  As  in  previous  years,  a  majority  of  survey  participants  in  the  euro  area 
countries were satisfied with the current selection of euro coins – 66% believed that there 
was just the right number of euro coins. In contrast, 26% of the respondents thought that 
there  were  too  many  euro  coins  with  different  values,  and  1  in  20  (5%)  interviewees 
considered that there were not enough (see graph 6). 

40   http://money.cnn.com/2012/02/15/news/economy/pennies_nickels/index.htm?hpt=hp_t3 

40 

 
 
 
                                                            
Chart15

Source: Flash Eurobarometer 362 in 2012 

26% of the citizens that participated in the Eurobarometer survey stated that there were 
too  many  euro  coin  denominations.  This  group  of  respondents  were  asked  which 
denominations they consider superfluous. Almost 9 in 10 (88%) of them would like to see 
the 1 euro cent coin removed from circulation (23% of all respondents). A similar share 
(82%), of those interviewees in the euro area countries who felt that there were too many 
euro coin denominations, would like the 2 euro cent coin removed (representing 21% of 
all survey respondents). These are the most mentioned coins by a considerable margin. 

It  can  be  concluded  that  there  seems  to  be  satisfaction  with  the  different  coin 
denominations, with however less support for 1 and 2 euro cent coins.  

41 

 
 
 
Chart 16 

Source: Flash Eurobarometer 362 in 2012 

2.  Scenario of withdrawal through fading out while keeping legal tender 

("Fading out scenario") 

A variant of the quick withdrawal scenario is a "fading out scenario" which would have 
the effect of withdrawal but achieve it through cessation of issuance of the 1 and 2 euro 
coins combined with the application of rounding rules. Without further intervention, these 
denominations would disappear as a consequence of the high loss rate and the fact that no 
new coins are issued and injected into the cash cycle.41 

The rationale of the fading out scenario is the same as for the quick withdrawal scenario. 
Both  scenarios  are  based  on  the  assumption  that  the  1  and  2  euro  cent  coins  are 
impractical  and  too  cumbersome  and  expensive  for  payment  transactions.  The 
attractiveness  of  the  fading  out  scenario  compared  to  the  quick  withdrawal  scenario 
derives from the fact that one big organisational step in abolishing the 1 and 2 euro coins 
(i.e. the cost generating physical withdrawal exercise) does not have to be carried out.42  

41   See above chapter I.4. 

42   The  transportation  costs  under  the  withdrawal  scenario  are  likely  to  be  an  important  factor  in  the 
overall  withdrawal  costs.  On  the  generous  assumption  that  the  return  rate  would  be  as  high  as  the 
withdrawal rate of the 50 øre coin in Sweden in 2010 (30% of the issued coins were returned to central 

42 

 
 
 
 
                                                            
2.1.  Need for euro area rounding rules and practical consequences for the 

cash user 

As  with  the  quick  withdrawal  scenario,  legally  binding  rounding  rules  would  also  be 
needed under the fading out scenario. One reason for the introduction of rounding rules is 
that,  from  a  legal  point  of  view  rules  on  rounding  fractional  sums  need  to  be  put  into 
place to provide legal certainty in cash payments of fractional final sums in the euro area. 
The  second  reason  for  rounding  rules  under  the  fading  out  scenario  is  to  make  this 
scenario efficient. 1 and 2 euro cent coins still circulate until they are fully absorbed and 
disappear from circulation. In principle, the parties of a euro cash transaction still possess 
these denominations and can use them for payment, although these coins would become 
rarer. In order not to jeopardise the scope of the fading out scenario and slow down the 
effect  of  gradual  disappearance  of  the  coins,  it  should  be  avoided  that  cash  transaction 
parties still use the 1 and 2 euro cent coins to settle the exact amount. A binding rounding 
rule would force the parties legally to settle the rounded amount, it being understood that 
1 and 2 euro cent coins could still be used, but only for rounded settlement.  

2.2.  Duration of the fading out scenario and role of the loss rate 

The fading out scenario is based on the assumption that upon cessation of issuance, the 1 
and 2 euro cent coins disappear automatically and gradually from circulation without any 
further  intervention.  Against  this  background,  it  is  important  to  learn  by  when 
disappeance  from  circulation  or  at  least  substantial  absorption  of  these  denominations 
could be expected. The loss rate of these coins, as reported by euro area Member States, 
could be informative for these calculations.43  

As stated above, euro area Member States, answering to the question on the loss rate of 1 
and 2 euro cent coins, reported that the rates differ between 25% and close to 100%. Not 
all euro-area Member States have answered the question on the loss rate. It is understood 
that the amounts of coins in circulation in Member States naturally diverge considerably 
as also the average amount of 1 and 2 cent coins in cash transactions of euro cash users is 
likely to vary substantially across the euro area.44  Therefore, the absorption of the coins 
in one Member State would take longer than in another. Against this background, one can 
only roughly estimate on the basis of the loss rate by when the amount of coins still in 
circulation  has  reached  a  level  that  can  be  considered  as  a  negligable  quantity  of  cash 
payment means. 

The calculation below simulates the effects of a fading out scenario based on the average 
loss rate (around 60%) of the 1 and 2 euro cent coins as reported by euro area Member 

banks), the volume of issued 1 euro cent coins would amount to 45.450 tons whereas the volume of 
returned 2euro cent coins would be around 65.208 tons.  

43   At least from a mathematical point of view full disappearance is not possible, given that the calculation 

by means of the loss rate approaches zero without ever reaching it. 

44   This  amount  is  shaped  by  the  size  of  the  economy  of  the  Member  State,  the  number  and  'coin 
composition'  of  the  cash  transactions,  the  cash  payment  habits  and  external  factors  such  as  coin 
migration  across  the  euro  area.  As  an  example  for  the  latter,  in  2012,  around  37%  of  all  coins  in 
circulation in Germany were issued abroad.  

43 

 
 
 
                                                                                                                                                                                 
States. It is based on the assumption that the loss rate would be the same in all euro area 
Member States and that it remains stable over time during the fading out scenario. The 
table shows that based on the current loss rate, very large amounts of 1 and 2 euro cent 
coins  would  already  have  disappeared  from  circulation  within  3  or  4  years  after  the 
cessation of issuance. 

Chart 17 

Simulation on the loss of 1 and 2 euro cent coins (number of coins, millions) 

1 cent coins 

  2 cent coins 

Annual loss rate 

  Annual loss rate 

60% 

40% 

20% 

  60% 

40% 

20% 

2013 
(Jan) 

26,260  26,260  26,260 

  20,606 20,606 20,606

2014 

10,504  15,756  21,008 

  8,242 

12,364 16,485

2015 

4,202 

9,453 

16,806 

  3,297 

7,418 

13,188

2016 

1,681 

5,672 

13,445 

  1,319 

4,451 

10,550

2017 

672 

3,403 

10,756 

  528 

2,671 

8,440 

2018 

269 

2,042 

8,605 

  211 

1,602 

6,752 

2019 

108 

1,225 

6,884 

  84 

2020 

2021 

2022 

2023 

2024 

2025 

43 

17 

7 

3 

1 

0 

735 

441 

265 

159 

95 

57 

5,507 

  34 

4,406 

  14 

3,525 

  5 

2,820 

  2 

2,256 

  1 

1,805 

  0 

Source: ECB and Commission calculations 

961 

577 

346 

208 

125 

75 

45 

5,402 

4,321 

3,457 

2,766 

2,213 

1,770 

1,416 

The exact speed and development cannot be calculated nor predicted, given that there is 
no  empirical  data  on  fading  out  scenarios  from  Member  States  or  other  countries.  A 
decision  could  be  taken  to  end  the  legal  tender  of  these  coins  when  their  circulation 
becomes purely residual (e.g. end of 2020, based on a 60% loss rate scenario).  

44 

 
 
  
  
  
 
2.3.  Specific cost aspects of the fading out scenario 

It has to be analysed whether, compared to the quick withdrawal scenario, the fading out 
scenario  would  allow  to  save  costs  in  addition  to  those  that  would  be  generated  by  the 
effective  withdrawal  of  the  coins.  This  would  make  the  fading  out  scenario    more 
advantageous from a financial point of view.  

No lessons can be learned from Member States or other countries, given that no fading 
out  of  low  denominations  has  been  reported.  It  appears  that  only  in  Sweden,  a  country 
where low denominations coins have been withdrawn over decades, the issuance of one 
denomination  (2-krona  coin)  was  ceased  while  the  coin  remained  legal  tender.  The  2-
krona coin, the face value of which is around EUR 0,23, was issued from the 1870s until 
1971  while  its  metallic  composition  was  changed  several  times.  Nowadays,  the  coin  is 
mostly absorbed by the collector market rather than used as payment means.  

The  fading  out  would  have  to  be  accompanied  by  an  appropriate  euro  area-wide 
information  campaign  that  informs  about  the  practicalities  of  the  fading  out  and  the 
rounding  rules.  It  would  be  a  particular  challenge  in  such  a  campaign  to  explain  that 
rounding  rules  would  apply  even  if  the  exact  change  for  paying  the  unrounded  final 
would be available. The considerable costs of such an information campaign have to be 
factored into the overall costs of the fading out scenario. Similar public campaign costs 
would however also be generated under the quick withdrawal scenario.  

Nonetheless,  it  is  evident  that  even  though  the  circulation  of  these  small  coins  would 
diminish  under  the  fading  out  scenario,  banks,  supermarkets  and  other  retailers  would 
have  to  bear  the  costs  for  handling  these  coins  because  they  remain  legal  tender.  This 
would not be the case under the quick withdrawal scenario, even though these businesses 
would face an increased inflow of 1 and 2 euro cent coins during the withdrawal period 
and bear the related additional one-way handling costs.  

Finally  the  impact  of  the  two  scenarios  on  state  receipts  is  the  same.  While  under  the 
fading  out  scenario,  there  might  be  a  slight  increase  in  the  demand  for  5  and  probably 
also  10  euro  cent  coins,  this  would  be  the  same  under  the  quick  withdrawal  scenario. 
Under both scenarios, this is expected to have positive impact on seigniorage.  

IV. CHARACTERISTICS AND OVERVIEW OF THE FOUR SCENARIOS 

The  characteristics,  advantages  and  disadvantages  of  all  four  scenarios  that  were 
discussed  in  the  previous  sections  are  summarised  in  the  chart  below.  In  principle,  the 
variants share the main (dis)advantages of the respective main scenario. 

45 

 
 
Chart 18 

SCENARIO 

Continued 
issuance 
('status quo scenario') 

MEASURES 
NEEDED 

ADVANTAGES  DISADVANTAGES

None 

No  disruption  of  
current 
cash 
payment habits 

loss 

Continued 
('negative' 
in 
seigniorage) 
States 
Member 
where 
coin 
acquisition  costs  are 
above face value 

Continued 
production'  due 
high loss rate 

'over 
to 

storage 
transportation 

Handling, 
and 
costs 

Fragmented 
approach in euro area 
due  to  situation  in 
the 
Finland 
Netherlands 

and 

Continued issuance  at 
lower  issuance  costs 
('issuance  at  reduced 
costs scenario') 

Option  1:  Issuance  of 
less 
new 
coins  of 
precious 
metal 
replacing  progressively 
the current coins 

Amendment 
to 
EU Regulation on 
technical 
coin 
specifications 

No need for public 
information 
campaign  except 
if  colour  of  new 
coins  change  due 
to  new  metallic 
composition 

Alternative 
raw 
material  may  result 
in  a  different  colour 
of  new  coins  (white 
rather than red) 

in-
Technical 
depth  study  and 
testing  on  the  use 

to 
Possibility 
reduce  impact  of 
on 
coinage 

Challenge  to  ensure 
the  requested  quality 
characteristics  of  the 

46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SCENARIO 

MEASURES 
NEEDED 

ADVANTAGES  DISADVANTAGES

Option  2:  Reducing 
through 
costs 
enhancing 
the 
efficiency  of  the  coin 
production 
process 
(minting) 

of  alternative  raw 
material 

environment  due 
to better material 

Lower 
issuance 
costs  for  Member 
States 

coins  (e.g.  weight, 
thickness, 
diameter, 
size) 

loss 

Continued 
('negative' 
in 
seigniorage) 
States 
Member 
coin 
where 
costs 
acquisition 
remain  above 
face 
value  after  saving  on 
the  costs  of  the  raw 
material 

Handling, 
storage 
transportation 
and 
costs  for  cash  users 
unchanged 

related 

Costs 
to 
withdrawal  of  old 
coins 

No need for public 
information 
campaign 

storage 
Handling, 
and 
transportation 
costs  for  cash  users 
unchanged 

In-depth  analysis 
of 
coin 
the 
production 
(blank 
process 
and 
production 
minting) 
with 
focus  on  how 
production  costs 
can  be 
lowered 
(e.g..  Member 
States 
put 
minting  out  for 
public 
tender, 
other 
efficiency 
gains) 

to 

Lower 

issuance  Continued 

loss 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SCENARIO 

MEASURES 
NEEDED 

ADVANTAGES  DISADVANTAGES

costs  for  Member 
States 

Withdrawal 

('quick 
scenario') 

withdrawal 

Amendment 
to 
EU Regulation on 
euro 
denominations 

Loss 
('negative' 
seigniorage) 
in 
Member 
States 
where 
coin 
acquisition 
costs 
face 
above 
are 
value  put  to  an 
end 

Rules  on  end  of 
legal  tender  and 
transition  periods 
for 
at 
change 
(Central) Banks 

if 
in 

One-off income of 
charity 
organizations 
involved 
practical 
withdrawal 
(collection 
kettles) 

jars, 

of 
Withdrawal 
mainly 
coins 
through 
banks 
and cash handlers 

less 
Overall 
handling,  storage 
and  transportation 
cash 
for 
costs 
users  

48 

('negative' 
in 
seigniorage) 
States 
Member 
coin 
where 
costs 
acquisition 
remain  above 
face 
value  after  attempts 
to  save  on  the  coin 
production costs  

Increasing  efficiency 
of  coin  production 
might  lead  to  lower 
or 
staff 
levels 
different 
levels  of 
capital investment 

costly 

Large 
and 
information 
campaign  to  explain 
euro  cash  users    the 
consequences  of  the 
withdrawal  scenario 
including  that  there 
is  no    real  impact  on 
(perceived 
inflation 
inflation) 

No  possibility  to  pay 
the 
exactly 
arithmetical 
final 
amount  

to 

Costs 
withdrawal of coins 

related 

to 

 
 
 
 
 
 
 
 
 
 
 
SCENARIO 

MEASURES 
NEEDED 

ADVANTAGES  DISADVANTAGES

Transition  period 
for withdrawal 

Cash  users  put 
hoarded coins into 
the economy  

Impact 
blank 
on 
producers  and  on  the 
mint  business  (e.g. 
negative  effect  on 
staff levels) 

Fading  out  with  coins 
remaining 
legal 
tender 

('fading out scenario') 

Public 
information 
campaign 

Legally 
EU 
rules 

binding 
rounding 

Public 
information 
campaign 

('negative' 
Loss 
in 
seigniorage) 
States 
Member 
coin 
where 
costs 
acquisition 
are 
face 
above 
value  put  to  an 
end 

Handling,  storage 
and  transportation 
costs 
cash 
for 
users    expected  to 
decrease over time 

timing 
From 
perspective  not  a 
'big-bang'  solution 
but  allowing  euro 
users 
cash 
sufficient  time  to 
get 
to 
used 
payments  without 
1  and  2  euro  cent 
coins 

costly 

and 
Large 
information 
campaign  to  explain 
this 
impact  of 
the 
scenario on euro cash 
users  including  that 
withdrawal  has  no  
on 
impact 
real 
inflation 
(perceived 
inflation) 

longer 
No 
seigniorage 
income 
in  the  few  Member 
States  where  coin 
acquisition  costs  are 
below face value 

retailers, 
Mostly 
supermarkets 
and 
banks to bear costs of 
coin  processing  as 
long  as  coins  remain 
legal tender  

Difficulty  to  explain 
euro  cash  users  that 
they  have  to  pay  to 

49 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SCENARIO 

MEASURES 
NEEDED 

ADVANTAGES  DISADVANTAGES

cash 

the  rounded  amount 
at 
although 
hand would allow for 
exact  payment  of  the 
(= 
arithmetical 
unrounded) final sum

Impact 
blank 
on 
production  and  mint 
business 
(e.g. 
negative  effect  on 
staff  levels)  

V.  GENERAL CONCLUSIONS 

This chapter draws  general conclusions from the analysis of the  fact-finding  and  stock-
taking  exercise  on  the  continued  issuance  of  1-  and  2-euro  cent  coins  and  makes 
suggestions on how to move the discussion on the future of the 1- and 2-euro cent coins 
forward.  

FOUR POSSIBLE SCENARIOS 

•  Four possible scenarios are presented to tackle the challenges of the 1 and 2 euro 
cent  coins,  each  of  them  providing  solutions  that  apply  to  both  denominations 
equally. 

The  assessment  of  the  facts  and  figures  as  well  as  the  related  input  from  private  and 
public euro cash stakeholders led to the identification of two main scenarios (continued 
issuance  of  coins  and  withdrawal  of  coins)  with  one  sub-scenario  each.  This  makes  up 
four  possible  scenarios  for  the  1  and  2  euro  cent  coins  in  total.  The  scenarios  are  as 
follows: 

Continued issuance 

(1) Continued issuance of the 1 and 2 euro cent coins under today's issuance conditions 
without changing the legal and/or material context ("status quo scenario"); 

(2) Continued issuance at reduced costs through changing the material composition of the 
coins or by increasing the efficiency of the coin production or both ("issuance at reduced 
costs scenario"); 

50 

 
 
 
 
 
 
 
 
Withdrawal of coins 

(3) Withdrawal of the 1 and 2 euro cent coins entailing that these coins cease to be legal 
tender,  legally  binding  rounding  rules  are  introduced  and  that  the  coins  are  actively 
withdrawn from circulation ("quick withdrawal scenario"); 

(4) Fading out whereby the issuance of the 1 and 2 euro cent coins would cease but the 
coins keep their legal tender status while legally binding rounding rules apply. The coins 
would be expected to disappear gradually from circulation due to the high loss rate and 
the lack of attractiveness of these coins as convenient payment means and because of the 
lack of new coins being issued and injected into the market ("fading out scenario"). 

Each of the four scenarios would apply to the 1 and 2 euro cent coins even-handedly. The 
analysis did not bring up any indication that one of the scenarios should or could apply to 
one of the two denominations only. 

STATUS QUO SCENARIO 

•  Costs of production and issuance of 1 and 2 cent coins are generally high 

The  costs  of  production  and  issuance  of  1  and  2  euro  cent  coins  are  high  with  most 
Member States facing even 'negative seigniorage' as the acquisition costs of 1 and 2 euro 
cent coins exceeds the face value. There are important differences in the production costs 
between  euro  area  Member  States  with  some  Member  States  having  production  costs 
below  face  value  while  others  have  costs  as  high  as  three  to  four  times  the  face  value. 
This important cost gap cannot be explained by the costs of the raw material or the blank 
production process only, but is rather to be attributed to the final production process of 
the coins (i.e. minting). 

The transportation and handling costs of 1 and 2 euro cent coins are also significant. The 
demand for 1 and 2 euro cent coins is increasing because these coins are not circulating 
but  are  hoarded.  The  loss  rate  for  both  denominations  is  very  high  and  there  is  no 
indication that this trend would stop. Given the 'negative' seigniorage on these coins and 
the  high  loss  rate,  the  continued  issuance  of  1  and  2  cent  coins  appears  to  be  a  loss-
making  activity  for  euro  area  Member  States  with  a  global  loss  that  could  exceed  370 
million euro. 

•  Public  acceptance  of  the  continued  issuance:  citizens  are  generally  positive  but 

some private key stakeholders are open to explore alternatives to status quo  

Evidence  from  Eurobarometer  polls  shows  that  citizens  are  generally  satisfied  with  the 
current coin denominations with somewhat less support for the 1 and 2 euro cent coins. 
Given  that  many  prices  are  still  set  at  euro  cent  level,  the  two  denominations  remain 
useful to provide change, except in Finland or the Netherlands where cash payments are 
rounded. 

From  the  business  perspective,  the  position  of  cash-related  businesses  such  as  Mints, 
banks, cash transport companies and retailers on the issuance of 1 and 2 euro cent coins is 
of  particular  interest.  Mints  support  the  continued  issuance  of  these  coins,  since  they 
represent a substantial part of their activity. They do not have to cover the losses attached 

51 

 
 
 
to their production, which are charged to the treasury. Banks take a neutral view on the 
topic,  since  they  are  able  to  pass  the  costs  attached  to  their  customers  via  the  handling 
fees. 

The  cash  processing  industry  earns  money  with  transportation  and  processing  of  cash. 
Therefore,  this  industry,  generally  speaking  is  positive  on  handling  of  any  coin 
denomination.  However,  from  a  logistical  point  of  view  transportation  of  coins  is  quite 
cumbersome  and  fees  in  some  cash  processing  industries  are  rather  based  on  the  value 
processed and transported rather than on the quantity of coins or weight. 

The  vending  machine  industry  does  not  use  these  coins,  while  retailer  organisations  do 
not have firm views on whether to maintain them.  

SCENARIO OF ISSUANCE AT REDUCED COSTS 

•  The costs of continued issuance could be reduced by changing the raw material of 

the coins  

Two  major  options  to  reduce  issuance  costs  have  been  identified.  The  first  option  is  to 
change the composition of the coins and optimize exiting manufacturing tolerances or use 
cheaper metal such as stainless steel, while keeping the size and parameter of the coins 
unvaried.  The  use  of  less  precious  metal  could  in  some  cases  lead  to  a  change  of  the 
colour  of  the  new  coins  (e.g.  light  grey).  While  the  views  on  the  potential  alternative 
compositions of the 1 and 2 euro cent coins (stainless steel, aluminium, zinc) and the size 
of the potential cost reductions diverge, it is evident that the potential to save costs is real. 
Nevertheless,  the  impact  of  the  first  option  on  the  overall  cost  level  would  remain 
relatively limited as the cost of the raw material constitutes only a minor part of the total 
costs of the finished product. Important differences in production costs between euro area 
Member  States  are  not  due  to  the  costs  of  the  raw  material  or  the  blank  production 
process but have to be attributed to the final production process of the coins.  

•  The  costs of continued issuance could be reduced by enhancing the efficiency of 

the coin production process 

The  second  option  to  reduce  the  issuance  costs  would  be  to  focus  on  the  high  costs 
related to the final production process of the coins (such as minting). In this regard, there 
is clearly a need to investigate more closely the potential inefficiencies that would need to 
be addressed in the final coin production process. 

The  application  of  both  options  while  continuing  the  issuance  of  the  1  and  2  euro  cent 
denominations seems to bear potential for substantial savings. 

52 

 
 
 
QUICK WITHDRAWAL SCENARIO 

•  Citizens' view on a possible withdrawal scenario: mainly fear of inflation 

There  is  an  overall  satisfaction  with  the  euro  coin  denominations  in  general.  The  few 
people  dissatisfied  with  the  present  coin  denomination  structure  generally  indicate  that 
they would like the 1 and 2 euro cent coins to be withdrawn. 

The impact of a possible withdrawal of these denominations on inflation is a key concern 
of  citizens.  However,  it  is  more  likely  that  the  perceived  inflation  would  be  the  real 
problem rather than the impact of the withdrawal of the coins on the real inflation. The 
euro  changeover  in  2002  showed  that  inflation  perceptions  and  measured  inflation  can 
deviate  significantly.  There  was  a  strong  belief  of  the  public  that  prices  increased 
extensively but inflation was actually not higher before and after the Euro introduction. A 
similar misperception could appear in case of the withdrawal of the 1 and 2 cent coins. 
Against this background, a possible withdrawal should be accompanied by a timely and 
targeted information campaign to address the issue.  

Generally  speaking,  it  appears  that  consumer  organizations  are  in  favor  of  continued 
issuance  of  the  small  coins,  it  being  understood  that  consumer  organizations  provided 
only  rather  partial  replies  to  the  questionnaire  on  the  consumers'  view.  Consumer  and 
retailer associations are indeed expecting that prices for some goods would increase at the 
moment 1 and/or 2 euro cent coins are withdrawn. Contrary to consumers and retailers, 
the European Central Bank and the majority of euro area Member States do not expect a 
noticeable  impact  on  inflation  in  case  the  1  and/or  2  euro  cent  coins  are  withdrawn, 
provided that appropriate rounding rules are applied.  

•  The Member States' views on a possible withdrawal scenario are divided  

Generally  speaking,  Member  States  seem  to  be  reserved  on  the  question  of  a  potential 
withdrawal.  The  Member  States  response  rate  to  the  questionnaire  on  the  view  on  a 
possible withdrawal scenario was relatively low and there were a number of respondents, 
which have not provided a clear answer to this question. A small majority of the Member 
States  stated  that  the  issuance  of  the  two  smallest  euro  coin  denominations  should  be 
ceased.  Member  States  which  have  abolished  smaller  denominations  of  their  (former) 
currency over time are rather open-minded with regard to the withdrawal scenario. The 
two  euro  area  Member  States  where  1  and  2  euro  cent  coins  do  not  circulate  de  facto 
(Finland and the Netherlands) are in favour of a withdrawal scenario. 

•  Possible withdrawal and key stakeholders' business: mints fear losses but impact on 

other private key stakeholders is rather limited 

The  mints  indicated  that  the  cessation  of  issuance  would  negatively  impact  on  their 
business. Overcapacities in terms of production would force some mints to downsize or 
close down production units to some extent.  

By contrast, the replies from the coin processing industry are rather positive regarding the 
withdrawal  exercise  even  though  the  abolition  of  the  1  and  2  euro  cents  would  cause 
some minor losses for some cash in transport companies. 

53 

 
 
Retailer organisations have not voiced a common opinion but some of them indicated that 
the  storage  and  handling  costs  are  not  substantially  different  from  the  costs  related  to 
other  euro  coin  denominations.  Some  voiced  concerns  on  launching  a  withdrawal 
scenario during the current economic crisis given that consumers would likely to perceive 
changes in the coin denomination structure as a way to increase prices. 

•  Appropriate timing and information campaign is considered as crucial for success 

of a possible withdrawal 

In times of economic and financial downturn and particularly in Member States that are 
confronted  with  challenging  economic  adjustment  programmes,  citizens  are  sensitive  to 
any  changes  that  could  or  are  perceived  as  impacting  their  financial  situations.  Several 
stakeholders  signalled  that  disregarding  their  overall  positive  attitude  vis-à-vis  the 
withdrawal  scenario,  such  scenario  would  only  be  acceptable  if  it  took  place  at  a 
politically  appropriate  moment  of  relative  economic  stability.  In  addition,  key 
stakeholders  emphasized  that  any  withdrawal  scenario  should  be  accompanied  by  a 
timely and appropriate information campaign. 

FADING OUT SCENARIO 

•  The fading out scenario implies the introduction of rounding rules with cash users 

having to develop new payment habits 

Like under the quick withdrawal scenario, legally binding rounding rules would have to 
be  introduced  in  the  case  of  a  fading  out  for  the  sake  of  legal  certainty.  Habits  of  euro 
cash users would change. Rounding would also have to take place in situations where the 
availability of 1 and/or 2 euro cent coins would still allow for the exact payment of the 
fractional sum, which could lead to adverse reactions from some customers 

•  Fading  out  would  cause  a  rather  automatic  elimination  of  the  1  and  2  euro  cent 

coins from circulation due to the very high loss rate 

Upon cessation of issuance by the Member States under the fading out scenario, the high 
loss rate of the 1 and 2 euro cent coins would become instrumental for a fast and massive 
disappearance of these denominations from circulation over a limited period of time (3 to 
4 years). In an early phase of the scenario, cash users would most probably more actively 
're-inject'  the  coins  into  circulation  through  payments  in  supermarkets  and  at  retailers 
which,  in  return  would  contribute  to  a  faster  grower  disappearance  of  the  coins  via  the 
dispatch  of  the  received  coins  to  banks  and  central  banks  for  absorption.  However,  it 
should be noted that the speed of the fading out could substantially differ across euro area 
Member  States  due  to  factors  such  as  the  substantially  different  amounts  of  coins  in 
circulation, numbers of cash transactions and existing payment habits.  

Because of the rather automatic disappearance of coins, there are no withdrawal costs as 
would be the case under the quick withdrawal scenario. Nonetheless, there would remain 
some  costs  for  the  handling  of  these  coins  until  their  disappearance  from  circulation 
which mainly supermarkets, retailers and banks would have to bear.  

54 

 
 
 
The legal tender of these coins would be terminated when their circulation would become 
purely residual. 

KEY ADVANTAGES AND DISADVANTAGES OF THE FOUR SCENARIOS 

A  major  advantage  of  both  the  status  quo  and  the  issuance  at  reduced  costs  scenario  is 
that  the  existing  cash  payment  habits  would  not  be  disrupted.  This  is  not  true  for  the 
quick withdrawal and fading out scenario which would both call for rounding rules and 
changes in payment habits.  

While being attractive from a cash user perspective insofar as no new habits would have 
to be established, the status quo is quite unattractive from a cost perspective since it could 
perpetuate  the  situation  of  negative  seigniorage  in  many  euro  area  Member  States.  The 
issuance at reduced costs scenario, on the contrary, would allow reducing issuance costs 
by  changing  the  raw  material  of  the  coins  and/or  enhancing  the  efficiency  of  the  coin 
production. Important cost savings could also be achieved through the quick withdrawal 
or fading out scenario. The discontinuation of the 1 and 2 euro cent coin issuance would 
make an end to the negative seigniorage and reduce the overall coin handling costs.  

The  costs  of  an  information  campaign  that  could  be  needed  must  also  to  be  taken  into 
account when weighing the various options. 

Under  the  fading  out  scenario,  the  high  loss  rate  of  the  1  and  2  euro  cent  coins  would 
promote  a  fast  disappearance  (3  to  4  years)  of  these  denominations  from  circulation 
thereby  avoiding  the  costs  that  would  be  related  to  the  active  withdrawal  of  coins  in  a 
very  short  period  of  time  as  under  the  quick  withdrawal  scenario.  However, 
supermarkets, retailers and banks would have to bear the costs for the handling of these 
coins until they have disappeared from circulation. 

Discussions  between  stakeholders  are  needed  on  the  basis  of  these  4  scenarios.  If 
agreement would be reached on a preferred scenario, the Commission will come forward 
with the necessary proposals. 

55 

 
 
 
ANNEX 

SUMMARY OF SURVEY QUESTIONS 

Questions on status quo 

Demand and habits over time, including rounding: 

1.  What is the demand for 1 and 2 euro cent coins and has it changed since its first 

issuance? Is there any shortage or surplus of these coins? 

2.  Circulation and re-use of 1 and 2 euro cent coins: what is the rate of loss45 for 1 

and 2 euro cent coins? 

3.  Has the use of 1 and 2 euro cent coins as means of payment changed over time? If 
yes, what is the nature of the change(s), especially with regard to the introduction 
of new payment tools and consumers' habits and preferences? 

4.  What  is  the  experience  of  the  cash  in  transit  industry  with  euro  coin  transports 
to/in  Finland  and  the  Netherlands  in  comparison  to  other  Member  States?  Was 
there any change due to the introduction of rounding rules in these countries? 

5.  Are  there  any  prevailing  rounding  rules  for  cash  payments  and  are  electronic 

payments treated differently or equally for the purposes of rounding? 

Acquisition and production costs: 

6.  Do production/acquisition costs of 1 and 2 euro cent coins exceed, correspond to 

or fall below the face value? 

7.  What  are  the  costs  of  the  use  of  1  and  2  euro  cent  coins  (e.g.  handling  cost, 

storage cost) in retail business compared to the one of other denominations? 

Questions on the withdrawal scenario 

Need for implementing measures 

8.  Should the issuance of 1 and/or 2 euro cent coins cease, which implementation or 
accompanying  measures  would  be  appropriate?  How  long  would  it  take  to 
perform these measures? 

9.  Should the issuance of the 1 and/or 2 euro cent coins cease, how would euro area 

Member States arrange the withdrawal of the coins issued? 

Impact on inflation 

10. Should the issuance of 1 euro cent cease without introducing rounding rules, what 
would  be  the  impact  on  pricing  and  inflation?  Which  accompanying  measures 
would be helpful in order to avoid impacts on pricing?  

45  One  minus  the  circulation  rate,  the  latter  being  the  number  of  coins  returned  to  the  central  bank 

divided by the number of coins put into circulation. 

56 

 
 
                                                            
Impact on other coin denominations 

11. Would the cessation of 1 and/or 2 euro coins have any impact of payment in cash 

on items costing less than 5 euro cent?  

12. Would  the  cessation  of  1  and/or  2  euro  cent  coins  have  any  impact  on  the 
production  or  use  of  other  euro  coin  denominations  (such  as  the  5  euro  cent)? 
Would it have any impact on the use of electronic means of payment? 

Impact on key stakeholders 

13. Should the issuance of 1 and 2 euro cent coins cease what impact would business 
expect on their field of action? Which implementation measures would business 
consider  necessary  in  their  field  of  action?  How  long  would  it  take  to  perform 
these implementation measures? 

14. Should the issuance of 1 and/or 2 euro cent coins cease what impact would mints 
expect on their field of activity in terms of time and cost (e.g. termination of long-
term contracts on the supply of blanks)? What impact would occur in the mints' 
field  of  tasks  and  business  and  other  euro  coin  denominations  in  particular  and 
which  implementation  measures  would  be  required  in  mints'  field  of  tasks  and 
business?  How  long  would  it  take  to  perform  these  implementation  measures?

57 

 
 
Statistics on small denominations 

Currencies before introduction of the Euro. Smallest denomination 
€ cent equivalent  

Source : European Central Bank and Commission calculations. 

Currencies before introduction of the Euro. 2nd smallest denomination 
€ cent equivalent  

Source : European Central Bank and Commission calculations. 

58 

 
 
 
 
 
 
 
 
 
 
Currencies before introduction of the Euro. 1st and 2nd smallest denomination 
€ cent equivalent  

Source : European Central Bank and Commission calculations. 

 Currencies before introduction of the Euro. 1st and 2nd smallest denomination 
Purchasing power parities (cents) 

Source : European Central Bank and Commission calculations. 

59 

 
 
 
 
 
 
 
 
 
 
Currencies before introduction of the Euro. 1st and 2nd smallest denomination 
€ cent equivalent  

Country 

Euro (cents) 
Smallest 
 denomination
1.68 
Finland  
Malta  
2.33 
Netherlands   2.27 
1.71 
Cyprus  
0.60 
Spain  
Portugal  
0.50 
Luxembourg   0.62 
0.76 
France  
0.63 
Ireland  
0.62 
Belgium  
0.52 
Italy  
0.51 
Germany  
0.33 
Slovakia  
0.32 
Estonia  
0.15 
Greece  
0.07 
Austria  
0.04 
Slovenia  

2nd 
smallest
 denomination
8.41 
4.66 
4.54 
3.42 
3.01 
2.49 
2.48 
1.52 
1.27 
1.24 
1.03 
1.02 
0.66 
0.64 
0.29 
0.15 
0.08 

Source : European Central Bank and Commission calculations. 

Currencies before introduction of the Euro. 1st and 2nd smallest denomination 
Purchasing power parities (cents) 

Country 

Purchasing power standards (cents)
smallest
Smallest 
 denomination 
1.38 
Finland  
3.16 
Malta  
Netherlands   2.09 
1.91 
Cyprus  
0.65 
Spain  
0.61 
Portugal  
Luxembourg   0.50 
0.67 
France  
0.58 
Ireland  
0.55 
Belgium  
0.49 
Italy  
0.49 
Slovakia  
0.49 
Germany  
0.46 
Estonia  
0.16 
Greece  
0.07 
Austria  
0.05 
Slovenia  

2nd 
 denomination 
6.90 
6.31 
4.17 
3.82 
3.23 
3.03 
2.00 
1.34 
1.16 
1.10 
0.99 
0.98 
0.98 
0.92 
0.32 
0.13 
0.10 

Source : European Central Bank and Commission calculations. 

60 

 
 
 
 
 
 
International comparison. 1st and 2nd smallest denomination 
€ cent equivalent  

Source  :  European  Central  Bank,  National  Central  Banks  and  Commission 

calculations. 

International comparison. 1st and 2nd smallest denomination 
Purchasing power parities (cents) 

Source  :  European  Central  Bank,  National  Central  Banks  and  Commission 

calculations. 

61 

 
 
 
 
 
 
 International comparison. 1st and 2nd smallest denomination 

€ cent equivalent  

United States  

Code  Country 

Iceland  
Latvia  
Brazil 
Turkey  

Euro (cents) 
Smallest 
 denomination
12.83 
NO  Norway  
11.07 
Sweden  
SE 
6.71 
DK  Denmark  
5.68 
New Zealand  
NZ 
China 
5.56 
CN 
Czech Republic   4.07 
CZ 
4.06 
Switzerland  
CH 
0.90 
Japan  
JP 
0.73 
CA*  Canada  
0.72 
US 
1.79 
HU  Hungary  
0.62 
IS 
1.42 
LV 
0.43 
BR 
0.43 
TK 
1.00 
Euro  Euro Area 
0.96 
SA 
AR 
0.87 
ME  Macedonia FYR  0.81 
AU  Australia  
0.74 
0.24 
Romania  
RO 
UK  United Kingdom  0.58 
0.51 
BG 
0.50 
ZA 
0.41 
ID 
0.29 
LT 
0.29 
MX  Mexico  
0.24 
Poland  
PL 
0.06 
KO  Korea  
0.15 
IN 
0.13 
HR 
RU 
0.02 
Note: Issuance of the Canadian one cent coin ceased on 4 February 2013. 
Source:  European  Central  Bank,  National Central Banks and Commission 

smallest 
2nd 
 denomination 
64.16 
22.15 
13.42 
11.36 
11.12 
8.13 
8.11 
4.51 
3.63 
3.59 
3.58 
3.10 
2.83 
2.15 
2.14 
2.00 
1.92 
1.74 
1.63 
1.48 
1.18 
1.15 
1.02 
0.99 
0.82 
0.58 
0.58 
0.49 
0.32 
0.31 
0.27 
0.12 

Bulgaria  
South Africa 
Indonesia 
Lithuania  

Saudi Arabia 
Argentina 

India 
Croatia  
Russia 

calculations. 

62 

 
 
International comparison. 1st and 2nd smallest denomination 

Purchasing power parities (cents) 

Code  Country 

Switzerland  
Argentina 
Latvia  

Saudi Arabia 
United States  
Turkey  
Brazil 
Japan  

Purchasing power standards (cents) 
smallest 
Smallest 
 denomination 
NO  Norway  
8.21 
CN 
15.68 
China 
SE 
Sweden  
8.57 
CZ 
Czech Republic   5.53 
NZ 
5.36 
New Zealand  
DK  Denmark  
4.92 
HU  Hungary  
2.90 
CH 
2.56 
AR 
2.55 
2.12 
LV 
ME  Macedonia FYR  2.12 
2.07 
SA 
0.76 
US 
0.74 
TK 
0.72 
BR 
0.71 
JP 
0.61 
CA*  Canada  
0.55 
Iceland  
IS 
1.23 
South Africa 
ZA 
1.11 
BG 
Bulgaria  
0.44 
Romania  
RO 
1.06 
Euro  Euro Area 
0.99 
Indonesia 
ID 
0.68 
India 
IN 
UK  United Kingdom  0.58 
0.51 
AU  Australia  
0.47 
LT 
Lithuania  
0.46 
MX  Mexico  
0.41 
PL 
Poland  
0.09 
KO  Korea  
0.20 
HR 
0.06 
RU 

2nd 
 denomination 
41.04 
31.36 
17.14 
11.07 
10.73 
9.85 
5.79 
5.11 
5.10 
4.24 
4.23 
4.13 
3.82 
3.70 
3.62 
3.57 
3.04 
2.77 
2.45 
2.21 
2.19 
2.12 
1.98 
1.37 
1.16 
1.03 
0.93 
0.93 
0.81 
0.46 
0.39 
0.29 

Croatia  
Russia 

Note: Issuance of the Canadian one cent coin ceased on 4 February 2013. 
Source : European Central Bank, National Central Banks and Commission 

calculations. 

63 

 
 
Total circulation of Euro banknotes and coins (€ billion)  

            Source : European Central Bank and Commission calculations. 

Total circulation of Euro banknotes and coins (€ billion)  

2002 
January August

2012 

Increase
(%) 
304.7% 
91.1% 
293.5% 

Banknotes  221.5 
12.3 
Coins 
233.8 
Total 
Source : European Central Bank and Commission calculations. 

896.4 
23.5 
919.9 

Total circulation of Euro coins (€ billion) 

       Source : European Central Bank and Commission calculations. 

Total circulation of Euro coins (€ billion)  

2012 

2002 
January August
0.06 
2 cents 
0.12 
1 cent 
Coins (all denominations) 12.30 
            Source : European Central Bank and Commission calculations. 

Increase 
(%) 
318.7% 
246.8% 
91.1% 

0.26 
0.40 
23.50 

64 

 
 
 
 
  
  
 
 
 
 
 
  
  
Total circulation of Euro coins (quantity, billion) 

         Source : European Central Bank and Commission calculations. 

Total circulation of Euro coins (quantity, billion) 
2002 
January August
6.1 
2 cent 
5.8 
1 cent 
Coins (all denominations) 38.1 
            Source : European Central Bank and Commission calculations. 

Increase 
(%) 
76.1% 
71.2% 
62.2% 

25.6 
20.2 
100.7 

2012 

Value of 1 and 2 Euro cent (% over total value of coins) 

            Source : European Central Bank and Commission calculations. 

Value of 1 and 2 Euro cents (% over total value of coins) 
2012 

2002 
January August
1.09% 
0.50% 
2 cents 
1.72% 
0.95% 
1 cent 
2.81% 
Total (1 and 2 cents) 1.45% 

Increase
(%) 
119.1% 
81.5% 
94.5% 

Source : European Central Bank and Commission calculations. 

65 

 
 
 
 
 
  
  
 
 
 
 
 
  
  
Percentage of 1 and 2 cent coins over total coins, August 2012 (value) 

Source : European Central Bank and Commission calculations. 

Number of 1 and 2 Euro cent (% over total number of coins) 

          Source : European Central Bank and Commission calculations. 

Number of 1 and 2 Euro cent (% over total number of coins) 

2002 
January August
16.07% 
2 cents 
15.31% 
1 cent 
Total (1 and 2 cents) 31.38% 

2012 

25.46% 36.9% 
20.09% 23.8% 
45.55% 31.1% 

Increase
(%) 

Source : European Central Bank and Commission calculations. 

66 

 
 
 
 
 
 
 
 
 
  
  
Percentage of 1 and 2 cents coins over total coins (number) 

August 2002 

August 2007 

August 2012 

Source : European Central Bank and Commission calculations. 

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
Net issuance of 1 and 2 euro cent coins at national level 

Eurobarometer results at country level 

Base:  those  who  answered  there  were 
too many coins with  
different values 

Base: those who answered there were too 
many coins with  
different values 

68 

 
 
 
 
Base: those who found it rather or very 
difficult to distinguish  
and handle the coins 

Base:  those  who  found  it  rather  or  very 
difficult to distinguish  
and handle the coins 

69