Search the pockets, wallets, purses, car cigarette ashtrays and homes of anyone in (almost) any eurozone country and you are likely to find significant heaps of small, brown iron-and-copper 1 and 2 euro cent coins.
They cost more to make than they are worth, there’s precious little you can buy with them (though the German post office does sell a €0.03 stamp) and they tend to accumulate in drawers and on flat surfaces at an alarming rate. So, one might reasonably ask, why not just get rid of them?
That is what the European Commission modestly proposed last week. But it has been met with a swift and firm Nein from Germany, with Jens Weidmann, Bundesbank president, lending his weight to those opposing change.
The Commission points out that the nearly 46 billion 1 and 2 cent coins that have been minted since 2002 represent about 137 coins per person in the eurozone. It estimates that the cumulative loss from making the things is €1.4bn.
People don’t treat the coins as valuable (hence the piles of coppers accumulating in jars and drawers) so there is an ongoing demand to mint fresh ones. On the other hand, abolishing the coins leads to the natural assumption that retailers will round their prices up rather than down, nudging inflation higher.
Step forward Mr Weidmann, talking to Germany’s biggest circulation newspaper Bild, at the weekend:
There is a wish among the German population to keep hold of the small coins. I can personally only join that opinion.
He went on to point out that the actual decision would have to be made by EU finance ministers, not the central banks.
One German children’s education charity told the German news agency dpa it feared losing hundreds of thousands of euros a year in donations if the 1 and 2 cent coins were withdrawn from circulation, since , it said, these made up a quarter of the cash donations it collects every year.
Back in Brussels, the Commission has said it is still consulting “stakeholders” and made clear that abolishing the coins is only one option (the others being to continue using them as they are or issuing ones that are cheaper to make).
Slightly lost in the debate, though, is that fact that two eurozone countries already live in the post-small change era. Both the Netherlands and Finland eschew the tiniest coins. The Dutch experience shows one doesn’t necessarily have to fear inflation as a consumer or a loss of pricing flexibility as a retailer.
As a quick glance at any Dutch retailer’s website will show you, the age-old psychological trick of pricing something with a trailing 99 cents to make it look cheaper is very much alive and well. All that happens is, if you pay cash, you can expect to have your bill rounded up or down to the nearest five cents. Or, as many Dutch people do, you just pay by card.