July 19, 2018 – The effect is widely known: The more something is repeated by the media, the stronger it is perceived. To what extent does this influence the perception of disappearing small denominations? How many denominations have actually disappeared in the last two years? How many new ones have been minted? This article provides an inventory.
Currency News issues an utterly useful handbook. It is the “Directory of Circulation Coins”, which summarises the basic technical data of all circulation coins and thus provides a good overview of what is being minted internationally. The first edition of this book was published in 2014. The second one came out in 2016.
The smaller denominations
There is hardly a mint which is not worried about smaller denominations vanishing during the coming years. There is a lot of discussion going on in the media, whether the benefits of the small denominations can actually justify their high production costs. As part of a worldwide austerity policy, some politicians or central banks accept the media’s suggestion and think about resp. abolish the smaller denominations. One recent example for this is Italy, as could be read in all European media.
Indeed the euro zone seems particularly active when it comes to the abolition of 1 and 2 cent-coins. It was already in 2014 that Finland and the Netherlands had refrained from minting these denominations. Between 2014 and 2016, Ireland followed and, as mentioned before, Italy announced their abandonment of the two denominations in May of 2017.
This poses the question, of this is a European or a worldwide problem. Because the United States of America for one seem to prefer another policy. After a cost-benefit analysis, the American government decided to keep bearing the high cost of the cent- and nickle-production in order to spare the private sector the even higher changeover costs. Canada on the other hand has been going without the penny since 2012.
In order to get a clearer picture of the situation, there is nothing to be done but simply count. Which countries have abolished smaller denominations between 2014 and 2016? And in what relation does their number stand to the number of countries who have kept their denominations the way they were?
Smaller denominations abolished:
|Country||Denomination(s)||last minted||population in m.|
|Cook Islands||1 , 2 , 5 cents||2010||0.02|
|Gibraltar||1 , 2 pence||2012||0.03|
|Honduras||1 , 2 centavos||1992 / 1974||8.89|
|Ireland||1 , 2 cent||2016||4.78|
|Italy||1 , 2 cent (planned)||2015||60.60|
|South Africa||5 cents||2012||54.00|
|South Korea||1 won, 5 won||2012||50.50|
|Tonga||1 , 2 seniti||2006 / 2004||0.10|
|Vanuatu||1 , 2 vatu||2002||0.26|
These countries are Barbados, Brazil, Cook Islands, Gibraltar, Honduras, Indonesia, Iran, Ireland, Italy, Jamaica, Kenya, the Comoros, Lesotho, Madagascar, Nepal, South Africa, South Korea, Tonga, Tunisia, Vanuatu and Yemen.
In other words: 20 of 181 states have axed one or two smaller denominations during the last two years. A total of 30 denominations have disappeared worldwide. Two of them were circulating in heavily populated countries: Brazil and Indonesia. Six of them are not relevant, as the number of people who use them is below one million inhabitants.
What does it look like on the other side? How many countries have extended their denomination system and introduced larger denominations? Have these new denominations already been minted or introduced into the circulation of money or has their introduction merely been planned?
Larger denomination introduced:
|Country||Denominations(s)||In the planning stage||population in m.|
1, 20, 50 , 100 kwanzas
|Panama||2 balboa||minted, not in circulation||3.93|
There are inherently less large denominations introduced than smaller denominations abolished. In total, there are only nine countries that have shifted the coin-banknote-boundary upward. Only one of them is a heavily populated country, namely Mexico. Four of the nine countries have a population of less than one million inhabitants.
It is interesting that nine countries have been planning to mint a larger denomination but some of them have been doing so for more than two years. One might ask why they have not yet started to implement these plans.
The numbers confirm the notion
Thus 30 disappeared denominations stand against 12 new ones. The difference increases, considering that the countries that have reduced their small denominations are inhabited by 863.66 m. compared to a population of 195.83 m. in the countries which introduced larger denominations.
An analysis according to mintage could not be done as the mintage of circulation coins in many of these countries is unknown. The dimensions of the decrease in mintage can be estimated by means of the mintage of the Brazilian centavo from the years 2001 to 2004.
Mintage of the Brazilian centavo:
A shift of mintage
In conclusion there is a tendency that goes away from the mass mintage of smaller denominations toward minting more upmarket, quality large denominations. There seems to be a general interest in introducing these new denominations. It should be a (rewarding) task for the minting-industry to convince governments and central banks of realising the issue of larger denominations.
This article was originally published in Mint News Quarterly 17/3.
If you want to have a look at the 2016 edition of the “Directory of Circulation Coins”, click here.
At CoinsWeekly, you can read a news item on the smaller denominations being abolished in more and more European countries, such as Italy.