Payment: the end of 1 and 2 cent coins from 2023?

The 1 and 2 cent coins will soon be removed from payment. The measure is even more likely to increase prices.

The European Commission has long considered the disappearance of the 1 and 2 euro cent coins for different payments. The project could result in significant savings to the state budget. But in return, the portfolio of the French risk taking another blow . In full inflation, the abolition of the two pink coins raises doubts among the unions. Should we be worried about it? Details in this article.

Abolition of 1 and 2 euro cent coins in cash payments?

The abolition of 1 and 2 cent coins has been discussed for several months . During the years 2020-2021, MoneyVox consulted 17,000 participants to get an idea. A total of 72% of respondents said that the 1 and 2 cent coins are not useful .

The European Commission in charge of this measure has not yet spoken . The latter was to give its decision this December. But because of inflation, the measurement will not be done for months .

“There is nothing new about the abolition of 1 and 2 cent coins,” said a source from the European Commission interviewed by our colleagues.

However, the Commission did not abandon the project altogether . In a few months, it should “propose legislation ending the issuance of 1 and 2 cent coins and introduce common rounding rules”.

Payment: a doubt that hovers in full inflation

At present, 5 countries in Europe no longer use 1 and 2 cent coins euros in their cash payment. These are Belgium, Finland, Ireland, Italy and the Netherlands. France, for its part, wanted to temporize this measure that she does not consider it a priority at the moment . Moreover, this year, 300 million coins of 1 and 2 cents were minted in the country.

The CGT said in a statement that the small pink coins offered the possibility 'of have a price as close as possible to the real value of the property plus the trader's margin'.

Also, faced with the loss of purchasing power, the disappearance of small roses worries the union . Especially since in 2023, the inflation rate risk of reaching the 7% mark .

If the device materializes, the CGT fears that traders will “round up prices to their exclusive advantage. (…) While all consumers in the euro zone face unprecedented inflation , they would not understand that the disappearance of the 1 and 2 centimes coins should be stopped in such a context even though this disappearance risks aggravating inflation . »

“In fact, it will necessarily be inflationary”

The abolition of the 1 and 2 cent coins would allow the European Union to make savings. The European executive had notably indicated in a 2018 report the 'high production and processing costs' of these parts.

According to economist Jean-Paul Betbeze:

“This currency costs more than it is worth. »

A 1 cent coin has a manufacturing cost of 1.65 euro cents. A 2 cent coin, meanwhile, costs 1.94 cents . The European Commission maintains that the manufacture of these parts has generated an expenditure of 1.4 billion euros between 2002 and 2013.

“One might wonder what is the use of a currency that is in deficit? (…) In my opinion, these two coins are a currency of vigilance. There is a psychological effect that makes you pay more attention to prices and how rounding is done. This allows people to become aware of the value of their money,” said Jean-Paul Betbeze.

Faced with inflation, the French are more and more concerned about their wallet . To respond to consumer fears, the European Commission has thought of regulations to round off payments .

“In theory, traders will need to round prices to the nearest 5 cents (down for cents ending in 1-2-6-7 and up for 3-4-8-9), with the buyer's agreement. And this, only for payment in cash, since cards and checks will remain to the nearest penny,” explains Jean-Paul Betbeze.

But the other side of the coin is not negligible . The economist goes on to say:

“In fact, it will necessarily be inflationary. Instead of being at 9.99 euros, a product will thus go to 10 euros, an increase of 0.1% ”.

Source : Moneyvox