Small change in the 17-member euro area may have no future, the European Commission has argued. It said one and two-cent coins involved production costs far higher than their nominal values.
In a communiqué issued Tuesday, the EU commission said it had investigated the use of 1 and 2-eurocent coins against the criteria of both production costs and public acceptability.
"The Commission has consulted businesses and consumer associations, treasuries, mints and central banks on the pros and cons of continued issuance of the coins [in question]," Vice-President for Economic and Monetary Affairs, Olli Rehn, said in a statement.
He noted the production of such coins was clearly a loss-making activity for the euro area, with the difference between their face value and production costs having amounted to 1.4 billion euros ($1.82 billion) since their introduction in 2002.
Brussels came up with two scenarios that would see the immediate or gradual disappearance of the small change. It said there could be a quick withdrawal of the coins, with issuance ceasing completely and the coins in circulation to be withdrawn through retailers and banks within a short time span. Binding rounding rules would apply across the bloc.
In another scenario, issuance would also come to a halt, but coins in circulation would not be withdrawn and would be expected to disappear over time as they were reported to have a high loss rate anyway.
But the EU executive warned citizens were generally attached to the small change and could fear a price hike, if it were done away with completely. That's why it also mentioned the option of keeping the coins while making their production cheaper through changing the material composition.
"We will now take forward the discussion with stakeholders and member states and see whether a clear preference emerges on which to base a legislative proposal," Rehn said.
Since 2002, eurozone member states have issued more than 45.8 billion one- and two-cent coins, the equivalent of 137 coins per capita.