EU considers withdrawal of 1 and 2 euro cent coins
The European Commission on Tuesday (14 May) tabled several scenarios for the withdrawal of the 1 and 2 euro cent coins, with the cost of printing these coins greater than their use.
"The production of 1 and 2 cent coins is clearly a loss-making activity for the euro area with the difference between the face value of the coins and the price paid by the state to get them pointing at an estimated total cumulative loss of €1.4 billion since 2002," the commission said in a press release.
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Public opinion about the 1 and 2 euro cent coins is "rather paradoxical", says the commission, referring to various Eurobarometers. On the one hand, people seem attached to these coins and fear inflation should they to disappear. But on the other hand, they do not re-circulate them.
The commission tabled four scenarios on what to do with these coins, based on consultations with business and consumer associations, national treasuries, mints and central banks.
Under the first scenario, the coins would continue to be issued at their current cost, without altering their composition, meaning more financial losses for the eurozone. A second scenario proposes the coins to be kept, but to reduce their issuance cost by changing their composition or by increasing the efficiency of coin production.
Scenarios three and four suggest a quick or a gradual withdrawal of the coins. A quick withdrawal would be the cheapest solution, while a gradual one within 3-4 years would have less negative impact on retailers and consumers as it would give them more time to get rid of the unwanted change.
But the commission warns of inflation fears that may rise with the suppression of these coins, leading to a hike in consumer prices.
The scenarios will now be discussed with member states and the European Parliament before a decision is proposed.
"The commission does not have a preference for any one of the four scenarios at this point in time. Further discussions with all relevant stakeholders are needed on the basis of the four possible scenarios," it said.