Some love affairs only go so far. And German’s love affair with cash could slowly be running up against a copper and steel wall in the form on 1 and 2-cent coins.
While the idea of dropping these coins has been gaining ground, it recently found a high-level advocate in a group associated with the , the country’s central bank.
This comes just after US President signed an executive order to try to force the US mint to stop making pennies.
What’s suddenly so wrong with small change? Who doesn’t have a jar full pennies at home?
What is behind the move to drop small change?
These jars of coins are actually one of the problems.
Banks have long complained that they keep minting low-denomination coins that do not get returned since people take them as change but don’t actively spend them. They are either tossed on the ground or , which means they have essentially dropped out of circulation.
As a consequence, the EU . There are now 40.1 billion 1-cent euro coins in circulation, according to the . There are another 31.4 billion 2-cent euro coins in circulation.
The new push in Germany to drop low-denomination coins came from the National Cash Forum in March.
The National Cash Forum is a group backed by the Bundesbank that focuses on maintaining the availability and acceptance of cash as a .
When looking at 1 and 2-cent coins, the group decided they are not needed. The requirement to provide exact change is outweighed by other factors like cost savings, efficiency and even a reduced environmental impact by not minting and moving around little metal discs.
The group is calling on the finance ministry to “advocate for, and press ahead with, a binding statutory rounding rule in Germany,” according to a press release.
What is the cash rounding rule?
An argument for keeping small-denomination coinage is the “perfection of accounting,” said Jesse C. Kraft, an assistant curator at the American Numismatic Society, an organization dedicated to the study of coins and money.
“Because the majority of countries throughout the world use a decimal system that goes all the way down to one-one-hundredth of a given unit, having coins that can accommodate that number makes sense,” Kraft told DW.
But the National Cash Forum is not asking to erase the concept of 1 and 2-cents, just take the physical coins out of circulation in cash payments.
A price like €9.99 could still be paid electronically. But when it came to paying that same bill in cash, rounding rules would apply.
Without 1 and 2-cent coins would require rounding up or down to the nearest 5 cent. Importantly, individual prices would not be rounded, just the total bill. That same €9.99 bill would be €10.00 when paid in cash.
Other countries have dropped coins
An argument for dropping small-denomination coinage is the fact that these coins don’t go far economically.
“Nothing at the store costs one or two cents,” said Kraft.
“If specific denominations are being produced simply for the sake of precision, but not able to make purchases on their own, then the system should be amended — not changed on a fundamental level but simply shifted so that all of the coins in circulation can be used properly,” said Kraft.
Countries from Albania and Algeria to Vietnam and Zambia have dropped small-domination coins. Australia and New Zealand have too. The United States stopped minting its half-cent in 1857.
Canada eliminated its 1-cent coin in 2013 because it cost more to produce than its face value. Trump made a similar argument for ending the US penny.
Who already rounds in Europe?
Within Europe, Sweden, Hungary and Denmark already use the cash rounding method.
Within the , Belgium, Estonia, Ireland, Italy, the Netherlands and Slovakia also have some form of rounding for cash payments.
A survey by Eurobarometer published in December 2024, found that just over 60% of respondents in the eurozone are in favor of getting rid of 1 and 2-cent euro coins and replacing them with mandatory rounding.
Advocates see this as a way to reduce production, handling, sorting and shipping. Others argue that it is a step toward eliminating cash or is a good excuse for retailers to raise prices, if only by a few cents.
Other countries may still take this path, but finding a Europe-wide solution could prove difficult. And there is a lot to consider when dropping coins: Will existing coins still be legal tender? What will happen to exiting coins? Can multi-metal coins even be recycled?
Consumers in Germany still like cash
Kraft does not think discontinuing small-denomination coins is a path to getting rid of cash. “These things have happened before, and they will happen again,” he said. “One of the main reasons why people have a strong attachment to physical cash is the anonymity it allows.”
Others fear that the technology digital money relies on may not work when cash is needed most like during an emergency or major power outage.
Germans for one still love paying in cash — emergency or not.
In 2023, cash remained the most frequently used means of payment in Germany where it was used in 51% of all transactions, according to a survey by the Bundesbank. At the same time, cash use is in decline because of online shopping and the greater acceptance of cards and mobile payment methods.
The survey found that on average a German has around €100 ($113) cash in their wallet, an amount unchanged from previous years. The bank did not ask how much of that was in small change.
Edited by: Uwe Hessler
The post Can Germany ditch its 1 and 2-cent coins? appeared first on Deutsche Welle.
