ROADMAP

Title of the initiative

Communication on latest developments in relation to euro coins

Lead DG – responsible unit – AP Number

DG ECFIN (DDG1 C5)

Date of roadmap

19/06/2017

Likely Type of initiative

Non-legislative

Indicative Planning

Q4 2017

Additional Information

-

This Roadmap aims to inform stakeholders about the Commission's work in order to allow them to provide feedback and to participate effectively in future consultation activities. Stakeholders are in particular invited to provide views on the Commission's understanding of the problem and possible solutions and to make available any relevant information that they may have. The Roadmap is provided for information purposes only and its content may change. This Roadmap does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content.

A. Context, Problem definition and Subsidiarity Check

Context

Euro cash was introduced in physical form on 1 January 2002 and circulates in 19 EU Member States using the euro.

Regulation (EU) No 651/2012 on the issuance of euro coins requires the Commission to examine the use of different euro coin denominations against the criteria of cost and public acceptability and, in particular, "conduct an impact assessment on the continued issuance of 1 and 2 euro cent coins". The Commission has carried out this assessment in 2013 (Communication addressed to the European Parliament and the Council on issues related to the continued issuance of the 1 and 2 euro cent coins (COM (2013) 281 final, 15.4.2013) together with the Commission staff working document SWD(2013 175 final)). The impact assessment concluded that production of 1 and 2 euro cent coins is a significantly lossmaking activity for the euro area. According to the assessment, the economics of issuing 1 and 2 euro cent coins would plead for discontinuing issuance.

Four scenarios were developed including continued issuance at reduced costs and the withdrawal of the 1 and 2 euro cent coins with a quick loss of legal tender. The Council at the time opted for the former scenario.

The Commission has the obligation to periodically examine the use of the different denominations of euro coins on the basis of recital 7 of Regulation EU) No 651/2012 which provides for "the use of different denominations of euro coins and euro banknotes, as currently devised", to be "periodically and carefully examined by the competent institutions against the criteria of cost and public acceptability".

The Commission is now following up with a new Communication on the Communication of 2013, on the basis of Recital 7, focusing on the use and costs of 1 and 2 euro cent coins as means of payment In this regard, the Communication will also analyse the situation in euro area Member States where the use of 1 and 2 euro cents is de facto discontinued. The Communication will explore and suggest the best scenario to tackle the question on 1 and 2 euro cent coins.

In line with the Recital 7, the Communication will look into the cost efficiency of all euro coin denominations. 
The Communication will analyse latest trends and technical developments in the area of production, issue and processing of all euro coin denominations, in order to explore and suggest how to improve the euro coinage system further for the sake of best cost efficiency of euro coins.

Problem the initiative aims to tackle

The production costs of the 1 and 2 euro cent coins are high compared to their face value while their loss rate is significant (see the Commission's assessment accompanying its Communication of 2013 (SWD(2013 175 final). Yet they are mostly used only by retailers to give change once and disappear from circulation through hoarding 1 . This triggers continuous demand for these small denominations and perpetuates this vicious circle. Some Member States have discontinued the issuance of 1 and 2 euro cent and encouraged rounding of the final sum of purchase to the nearest 5 cent.

The Commission Communication of 2013 highlighted 4 scenarios concerning the issuance of the 1 and 2 euro cent, out of which one is to seek less costly production of the 1 and 2 cent. Euro area Mints have in the meantime improved technology to produce as of end of 2017 1, 2 and 5 cent at lower costs. Still, most of these "new" 1 or 2 cent will be lost. Another important scenario was the discontinuation of the 1 and 2 cent issuance. In 2013 this has not been taken up by the Council because it opted for the cost-efficiency scenario (less costly production of the 1 and 2 euro cent coins).

In addition to the specific issue of 1 and 2 euro cents, there are issues concerning all euro coin denominations which should be addressed briefly. Some Member States have excess stocks of certain coin denominations while other Member States continue to produce these very denominations. Coin migration and differences in national (coin) services affect Member States’ costs and income from coin issuance; this can lead to losses and gains in the seigniorage accrual of individual Member States which may accumulate to significant amounts over time. Furthermore it should be noted that the technical specifications and features of all euro coin denominations date from the mid-1990ies, while technology for coin production 
(e.g. composition of blanks and their electromagnetic properties), and coin authentication have evolved, as well as the quality of counterfeits. The euro area has not considered yet issuing an improved coin series in contrast to the European Central Bank which has already issued improved euro banknotes series for the lowest 4 denominations.

Subsidiarity check and added value

Subsidiarity is not applicable as the Communication itself will not imply new policy actions.

The Communication would bring added value by providing a comprehensive update of the situation, building among others on recent stakeholder input, to the European Parliament and Council. It would also support the possible preparation of a Commission initiative to adapt the euro coin legal framework.

B. What does the initiative aim to achieve and how

1.To prepare the Commission's follow-up on the impact assessment of 2013, using its mandate further to Recital No 7 of Regulation (EU) No 651/2012 to periodically examine the different (coin) denominations against the criteria of cost and public acceptability.

2.The focus will be on the current use, since 2013, of 1 and 2 euro cent coins as means of payment and on the current costs of the production of the lowest denominations of euro coins. The latest developments will be taken into account in particular in relation to a coin cost-effective production and developments in relation to security features of euro coins.

3.The Communication updates the European Parliament and Council and should support a possible preparation of a Commission initiative to adapt the euro coin legal framework (According to Art 128 (2) TFEU the Council adopts on the basis of a proposal of the Commission measures to harmonise the denominations and technical specifications of euro coins).

C. Better regulation

Consultation strategy

Further to the 2013 Communication discussions were held within bodies dealing with euro cash and euro coins, such as the Euro Coin Sub-Committee (ECSC), the Euro Cash Users Group (ECUG), the Cash-in-transit Committee (CIT Committee), the Task Force on the management of euro coin stocks and euro coin production, the European Central Bank and the recently set up Euro Coin Operations Working Group (ECOWG). Furthermore, citizens' opinions on the 1 and 2 euro cent coins have been asked for 3 consecutive years and published in the Eurobarometer surveys 405, 429 and 446. The Commission will use in its Communication the outcome of these discussions and the results of the Eurobarometer surveys.

By publishing this Communication the Commission has the intention to provide a useful framework for and to encourage further discussions, which would allow gathering further input and analysis on the issues at stake from various expert bodies and interested parties.

If the Commission decides to prepare a legislative proposal as a follow-up, and in particular building on the debate generated by the Communication in the European Parliament and in the Council, the usual procedure, including stakeholder consultations, will be followed in line with the Communication on better regulation (COM(2015) 2015 final).

Impact assessment

If the Commission decides to prepare a legislative proposal, under Article 128 (2) TFEU, as a follow-up the impact assessment of 2013 will be updated and adjusted according to the focus of the proposal.

Evaluations and fitness checks

No formal evaluation or fitness check is required by/of the legislation at this stage.

The Communication itself will provide an assessment of the current situation/latest developments and it will build on the results of 3 recent Eurobarometers (2014, 2015 and 2016) and on input received from relevant organizations such as the European Vending Association and other bodies dealing with euro cash as mentioned under the consultation strategy.

The analysis will also make use of the input and studies from the ECB, National Central Banks and other stakeholders, including the discussions held within bodies dealing with euro cash and euro coins, such as the Euro Coin Sub-Committee (ECSC), the Euro Cash Users Group (ECUG), the Cash-in-transit Committee (CIT Committee), the Task Force on the management of euro coin stocks and euro coin production, the European Central Bank and the Euro Coin Operations Working Group (ECOWG).