Desperate to save pennies as the economic crisis continues to bite, the European Union is mulling over phasing out one and two cent coins after it emerged that they cost more than their face value to mint.
The bloc’s legislative arm, the European Commission (EC), announced proposals last week to ditch the single currency’s lowest-value coins, arguing that the difference between the value of the coins and their cost to manufacture and distribute had reached €1.4bn (£1.18bn).
But opposition is growing, with the German broadcaster Deutsche Welle reporting yesterday that German citizens were keen to keep precise pricing.
“There are relevant surveys, including from the German Central Bank, that show that a huge majority of consumers like the one- and two-cent coins,” said Stefan Hertel, press spokesman for the German trade association.
The concern is that prices will be rounded up on products which lure the consumer with the psychological “99 cent” barrier – people would, for example, be much more inclined to buy a €3.99 tube of toothpaste than a €4 tube.
But evidence from nations such as Finland and the Netherlands, which have largely phased out the coppers, shows little difference in overall pricing.
Carsten Brzeski, an economist at ING in Brussels, told Reuters: “If you think about the psychology of price, I think you’ll rather see a rounding down to 95 cents than an upward adjustment.”
The fate of the 45 billion one and two cent coins in circulation will be decided after consultations between the EC and member states. Another option is to mint small value coins with cheaper materials than the current iron coins, which are coated in copper.