EU considers phasing out 1c and 2c coins

antoobrien

ardmacha wrote: »

I didn't say prices were set arbitrarily. I said that the weight of the currency devised to measure these prices was set arbitrarily.

That statement directly contradicts itself. You do realise that the weight used is part of the pricing mechanism, right?

The fact of the matter is that they didn't use some arbitrary weighting that the markets would not accept, instead they calculated the individual conversion rates using a formula that was based on the prevailing market rates of each currency in the euro basket.

31 December 1998 - Determination of the euro conversion rates


The alternative weighting you are describing would have required a devaluation of the Euro against the remaining currencies, which the markets would not have allowed for various reasons.

ardmacha wrote: »

In 1971, petrol was 7p a litre, 1/2p could buy you 70 millilitres of petrol. In 2002 petrol wa €0.90 and 1c buys you 11 millilitres of petrol, so the Euro 5c is closer in value to the old 1/2p, than the 1c.

And my parents bought a 21" tv in the early 80s paying £600 (€770). I bought a bigger one last year for €250, how does that comparison fit into your weighting?

ardmacha

The alternative weighting you are describing would have required a devaluation of the Euro against the remaining currencies, which the markets would not have allowed for various reasons

It would not have meant anything of the sort. The Euro had a sort of ancestor in the ECU, when the Euro was introduced it could have been 2 ECU or 2.5ECU. This would have made a cent a useful value and would not have affected the relative value of any currency.

And my parents bought a 21" tv in the early 80s paying £600 (€770). I bought a bigger one last year for €250, how does that comparison fit into your weighting?

Everyone knows that electronics have declined in price, so this is useless. General prices and salaries still illustrate my point. The average weekly wage in 1971 was €30-€35, 1/2p was a much bigger fraction of that amount than 1c is today.

Scofflaw

ardmacha wrote: »

It would not have meant anything of the sort. The Euro had a sort of ancestor in the ECU, when the Euro was introduced it could have been 2 ECU or 2.5ECU. This would have made a cent a useful value and would not have affected the relative value of any currency.

But why would one bother doing that simply in order to make the 1c coin a useful value? There is, if you'll pardon the confusion, no special value to the 1c coin that means the currency should be arranged specially to provide it with a role.

And if one is going to arrange the currency just to give 1c a value greater than it costs to produce it, why not extend the principle ad infinitum to the ha'penny and the farthing? The half-farthing? The third-farthing? The quarter-farthing even?

Money is a convenience and a medium. If the lowest value coin in a system retains the same purchasing power, it's irrelevant what that coin's face value is, except for arithmetical convenience.

ardmacha wrote: »

Everyone knows that electronics have declined in price, so this is useless. General prices and salaries still illustrate my point. The average weekly wage in 1971 was €30-€35, 1/2p was a much bigger fraction of that amount than 1c is today.

And everyone knows that oil prices have risen sharply in relative price, so your original example shared the same flaw you're now pointing out.

cordially,
Scofflaw

ardmacha

But why would one bother doing that simply in order to make the 1c coin a useful value?

If a currency has cents, why pitch it at a value that makes further roundoff to 5c units necessary?
It isn't a major issue, but Europe had currencies with larger value than the Euro, the IR£, UK£, CYP, LVL, I would have made it worth as much as these at least. I imagine the USD was in fact the concept they were looking at.

Arithmetical convenience may not be all that important, but since the Euro was given a completely arbitrarily value, why not facilitate arithmetic convenience?

And everyone knows that oil prices have risen sharply in relative price, so your original example shared the same flaw you're now pointing out.

Oil with a 1971 base wasn't an ideal example, but electronics is an even worse one!

Anyhow the Eurozone has bigger problems than this, but when we leave the punt nua should be €2!

Frolick

y0ssar1an22 wrote: »

I may be wrong about this but...
I read somewhere a while ago that Australia got rid of 1c and 2c coins because it was more expensive to produce them than they are worth.

If that is the case I assume it is the same for the Euro, in which case it should have been implemented a long time ago.

May be wrong though.:p

Canada have done this, they also have plastic notes. Makes so much sense.

crockholm

I have a little hobby about collecting all the different coins from the different countries(along with the special edition coins). Please let me and my nerdish kin continue in peace,or at least let us get our mits on the Latvian ones first.

antoobrien

ardmacha wrote: »

Oil with a 1971 base wasn't an ideal example, but electronics is an even worse one!

No the electronics just emphasises how silly the oil example is by showing the relative buying power of the penny has gone up in some areas and down in others.

A more useful metric of buying power would be the guinnes price index, which shows that the average wage packet could buy 10 less pints (2002 prices) than it did in the 70s.

The proper one to use would be CPI which shows that (in 1996 prices) the "basket" that cost €100 in 1996 cost €21.90 in 1975 (start of records) and €148.5 today. But then that doesn't support your theory about the utility of the 1/2c piece or even why prices were "inconvenient" numbers (to actually make the cashiers open the till to get change, rather than just pocketing the sales).

ardmacha wrote: »

Anyhow the Eurozone has bigger problems than this, but when we leave the punt nua should be €2!

If it ever happens the exchange rate is already set at 0.787564 and the market will decide what level it should go to - regardless of the valuation chosen. If you can remember the devaluation exercise in the mid 90s, the markets took a week or so to decide that the punt was actually worth less than £1 stg and values settle back to "normal" levels.

Scofflaw

ardmacha wrote: »

If a currency has cents, why pitch it at a value that makes further roundoff to 5c units necessary?
It isn't a major issue, but Europe had currencies with larger value than the Euro, the IR£, UK£, CYP, LVL, I would have made it worth as much as these at least. I imagine the USD was in fact the concept they were looking at.

Arithmetical convenience may not be all that important, but since the Euro was given a completely arbitrarily value, why not facilitate arithmetic convenience?

I would have said that arithmetical convenience was rather better served by only using multiples of 5, myself. And surely the more you set the currency's basic value at, the less convenient it becomes? One can turn the whole argument on its head and ask why the euro was pegged at a level that made cents necessary at all? Did it ever make sense to make cents?*

ardmacha wrote: »

Oil with a 1971 base wasn't an ideal example, but electronics is an even worse one!

The one example is a bad as the other, which illustrates the weakness of the argument itself.

ardmacha wrote: »

Anyhow the Eurozone has bigger problems than this, but when we leave the punt nua should be €2!

For about 15 minutes.

cordially,
Scofflaw


*sorry, I couldn't help it

ardmacha

And surely the more you set the currency's basic value at, the less convenient it becomes? One can turn the whole argument on its head and ask why the euro was pegged at a level that made cents necessary at all? Did it ever make sense to make cents?*

The point is that these issues probably weren't considered much, the ECU was originally an accounting unit worth a bit more than one dollar. I suspect that nobody thought much about the optimal design of a circulating currency.

The one example is a bad as the other, which illustrates the weakness of the argument itself.

Because both examples are bad doesn't mean that both are as bad as the other. Petrol is a significant part of people's expenditure, more so than TVs and although petrol has gone up and down electronics has shown real long term price changes that are an order of magnitude larger than petrol.

The limitations of my example does not undermine my point. The decimal currency of 1971 had a much higher value for its decimal component than the Euro had at launch. Inflation post 1971 was especially high, which killed off the 1/2p, inflation since the Euro has been modest, yet this debate is now arising.

For about 15 minutes.

This may underestimate the power of the markets!

Scofflaw

ardmacha wrote: »

The point is that these issues probably weren't considered much, the ECU was originally an accounting unit worth a bit more than one dollar. I suspect that nobody thought much about the optimal design of a circulating currency.

And the ECU replaced at parity the EUA, which was originally set at $1.20 in 1974. I can't see particularly that the original decision of setting what eventually became the euro at somewhat over a 1974 dollar was a strange one, or a bad value for the currency, and parity replacement since then doesn't seem unreasonable either.

In effect, the euro already had a 25 year history on the markets before it hit the shops in 2001, and complaining that it wasn't set at a value that would have resurrected the usefulness of pennies is a bit like making the same complaint against the dollar or the pound. In all those cases it would have taken a special decision to make the penny useful again - and would have seemed particularly strange in those countries where small value coins hadn't been in use for years already.

ardmacha wrote: »

Because both examples are bad doesn't mean that both are as bad as the other. Petrol is a significant part of people's expenditure, more so than TVs and although petrol has gone up and down electronics has shown real long term price changes that are an order of magnitude larger than petrol.

The limitations of my example does not undermine my point. The decimal currency of 1971 had a much higher value for its decimal component than the Euro had at launch. Inflation post 1971 was especially high, which killed off the 1/2p, inflation since the Euro has been modest, yet this debate is now arising.

The original value of the decimal pound seems to have been $2.40, which was a drop from its previous value of $2.80. That's not a huge difference, and to be honest the British penny is very nearly as useless as the 1c at this stage. It's saved slightly by the decision in 1992 to replace the coin with a cheaper one - pre-1992 pennies were worth 1.5p by 2006 in copper value alone.

ardmacha wrote: »

This may underestimate the power of the markets!

True, it may not last the whole 15 minutes.

cordially,
Scofflaw

antoobrien

Scofflaw wrote: »

the British penny is very nearly as useless as the 1c at this stage.

I dunno about that Scofflaw, I was in England a few times over the past year and I get far more 1p & 2p coins in change than we get 1c & 2c coins here. It came to the point that over 2 trips I had about £2 in 1p & 2p coins (and about £20 in other coins).

Scofflaw

antoobrien wrote: »

I dunno about that Scofflaw, I was in England a few times over the past year and I get far more 1p & 2p coins in change than we get 1c & 2c coins here. It came to the point that over 2 trips I had about £2 in 1p & 2p coins (and about £20 in other coins).

It's a hard one to definitively prove either way - I guess what I'd point to in defence of the claim is that (a) the UK changed over to cheaper pennies quite a while ago, and that (b) there's very little you can buy for a penny.

The former can be explained by higher copper values, but the latter would seem to suggest that a habit of pricing things so that you get more pennies in change is just that, a habit.

I would also point to the fact that it has been an occasionally live debate in the UK for a while - see http://news.bbc.co.uk/2/hi/uk_news/magazine/6589171.stm, for example - while as far as I know this is the first time it's come up here.

cordially,
Scofflaw

antoobrien

Scofflaw wrote: »

It's a hard one to definitively prove either way - I guess what I'd point to in defence of the claim is that (a) the UK changed over to cheaper pennies quite a while ago, and that (b) there's very little you can buy for a penny.

While the cost relative to value is a concern, I don't think the idea that "there's very little you can buy for a" coin/note has anything to do with the utility of that coin/note. If that's the case we can consider discarding coins below 20c as there's not a whole lot that can be bought for less than 20c.

Scofflaw

antoobrien wrote: »

While the cost relative to value is a concern, I don't think the idea that "there's very little you can buy for a" coin/note has anything to do with the utility of that coin/note. If that's the case we can consider discarding coins below 20c as there's not a whole lot that can be bought for less than 20c.

Funnily enough, I bought €4.20's worth of things late last night, and was given €16 in change from a €20. When (foolishly, perhaps) I queried it, I was told that the shop - all night Centra - rounds up that way as standard practice, which I admit I found odd.

But, leaving aside the anecdotal, if one rejects any meaning to a utility argument for or against the penny/cent, one what basis could one actually make the decision? Sentiment?

cordially,
Scofflaw

antoobrien

Scofflaw wrote: »

Funnily enough, I bought €4.20's worth of things late last night, and was given €16 in change from a €20. When (foolishly, perhaps) I queried it, I was told that the shop - all night Centra - rounds up that way as standard practice, which I admit I found odd.

First I've ever heard of anything that large happening.

Scofflaw wrote: »

But, leaving aside the anecdotal, if one rejects any meaning to a utility argument for or against the penny/cent, one what basis could one actually make the decision? Sentiment?

The only meaningful way of measuring it I can think of is the reuse of a coin or note. One of the biggest problems I think the ECB has is that the 1c &2c coins are not being reused but are left sitting in jars.

Scofflaw

antoobrien wrote: »

First I've ever heard of anything that large happening.

It surprised me so much I argued until I wound up with 80c...

antoobrien wrote: »

The only meaningful way of measuring it I can think of is the reuse of a coin or note. One of the biggest problems I think the ECB has is that the 1c &2c coins are not being reused but are left sitting in jars.

In that case, the penny is definitely in trouble - something like 6.5 billion of them have dropped out of circulation:

More than 10 billion of them are currently thought to be in circulation according to the Royal Mint.

Lost money

But that figure does not tell the whole story for since Britain went decimal in February 1971, more than half as many again have actually been produced, and truth be told, nobody quite knows where they have gone.

"The coins estimated to be in circulation, compared to the total number of 1p coins issued since it was introduced 36 years ago, suggests that over 6,500 million are no longer in general circulation," said a spokesman for the Royal Mint.

So, 6.5 billion out of 16.5 billion - a 40% loss. And according to other surveys, about 1 in 3 younger people actually toss them in the bin rather than carry them.

cordially,
Scofflaw

Gott

Nody wrote: »

Nope, they would still charge .99 (and then round it up/down depending on what the total ends up if needed).

Seconded. Canada recently scrapped their penny and have started rounding up or down to the nearest 5 while maintaining prices like $19.99.

It's something America should look at too considering it costs them 1.8c to manufacture a 1c coin but God forbid someone suggest getting rid of old Honest Abe from the coinage.

ardmacha

So, 6.5 billion out of 16.5 billion - a 40% loss. And according to other surveys, about 1 in 3 younger people actually toss them in the bin rather than carry them..

Surely some sort of drive in schools etc to collect these little coins would round up a lot of them. Say the government offered to match any money collected in 1c coins, it might not save money but would help schools.

Seconded. Canada recently scrapped their penny and have started rounding up or down to the nearest 5 while maintaining prices like $19.99.

It's something America should look at too considering it costs them 1.8c to manufacture a 1c coin but God forbid someone suggest getting rid of old Honest Abe from the coinage.

The US and Canada are particularly bizarre as they add on strange tax rates and create prices needing small coins even where the base price is pretty straightforward.

maryishere

the euro was badly designed....silly having a currency where 100th , 50th and 20th of the denomination are worthless.

Scofflaw

maryishere wrote: »

the euro was badly designed....silly having a currency where 100th , 50th and 20th of the denomination are worthless.

It's a common problem - read the thread.

regards,
Scofflaw

[Jackass]

Actually would be a good thing to round up prices and get rid of the 1 and 2 cent coins. Might get a bit of extra cash flowing / spending when tallied up over the whole union, could be a substantial amount of extra spending, which is whats needed.

Also, the 1 and 2 cent coins are entirely useless, I would very much like to see the back of them.

Finally, a lot of the big chains who charge 0.99 for something would more than likely reduce those prices to 0.95, 19.95, 99.95 etc. as the whole point is not to break the 20.00 mark, or 100.00 or whatever the amount is, for the whole psychological reason that it's done in the first place.

hfallada

Has anyone calculated the amount of time wasted by staff getting the 1 or 2 cent coins for the customers? If you are in Lidl with people only buying a few items sometimes the cashiers spends more time giving out the tiny change rather than scanning items

SPDUB

hfallada wrote: »

Has anyone calculated the amount of time wasted by staff getting the 1 or 2 cent coins for the customers? If you are in Lidl with people only buying a few items sometimes the cashiers spends more time giving out the tiny change rather than scanning items

I've found they waste far more time with Debt Cards ( waiting for it to be authorized , getting receipts signed ) in Lidl than any amount of cash to be given out .

paul71

Alun wrote: »

The Netherlands didn't, nothing smaller than 5 cents.

True, but on the outer side I remember France still having centimes in the mid 90s. The 1 centime coin was still in circulation and was still legal tender but was actually very rare, I only ever saw 1. Its value was about .1 of 1 euro cent.

bbsrs

AlmightyCushion wrote: »

Bring a bunch to tesco and dump them in the self service till when you're buying something. You'll be rid of them in no time.

They charge 10% by the way so only put in the ones you're too last to count , take out the big ones.

hognef

[Jackass] wrote: »

Finally, a lot of the big chains who charge 0.99 for something would more than likely reduce those prices to 0.95, 19.95, 99.95 etc. as the whole point is not to break the 20.00 mark, or 100.00 or whatever the amount is, for the whole psychological reason that it's done in the first place.

There'd be no need to change to .95 pricing instead of .99, as the whole point is to give the illusion of not breaking the 20/100/whatever mark.

Remember also that 5 items @ 0.99 would total 4.95, which bags the shop 20 cent more than 5 items @ 0.95 (4.75).

[Jackass]

True, but what I meant was that major chains would more than likely round down rather than up, as supposing the 1 and 2 cent coins we no longer circulated, they would have to change the price from 99 cent as everything would need to be divisible by 5 cent, so a good currently priced at 1.99 would have to either become 1.95 or 2 euro for example.

hognef

[Jackass] wrote: »

True, but what I meant was that major chains would more than likely round down rather than up, as supposing the 1 and 2 cent coins we no longer circulated, they would have to change the price from 99 cent as everything would need to be divisible by 5 cent, so a good currently priced at 1.99 would have to either become 1.95 or 2 euro for example.

Maybe, but they'll be even more likely to keep the prices the way they are today. Prices don't need to change, as they don't need to be divisible by 5 cent.

There are plenty of examples of unit prices not divisible by the smallest denomination in Sweden, Denmark, Finland, Norway, etc., some even here in Ireland: The price of petrol and diesel generally contains a fractional cent component, i.e. 155.9 cent or 149.5 cent per litre.

Senecio

[Jackass] wrote: »

True, but what I meant was that major chains would more than likely round down rather than up, as supposing the 1 and 2 cent coins we no longer circulated, they would have to change the price from 99 cent as everything would need to be divisible by 5 cent, so a good currently priced at 1.99 would have to either become 1.95 or 2 euro for example.

Individual prices do not change, it is only the final bill at the register that is rounded up or down.

We removed them in Australia back in the early 90's and some retail chains advertised that would round every final bill down. Within 6 months everyone forgot about it and we all moved on with our lives, neither richer nor poorer.

We just had lighter, less bulky wallets that weren't full of worthless copper. The sooner they are the better.

the_monkey

oops ...