In Germany several times it was discussed to stop issuing 1 and 2 Pfennig pieces. But it was never realized because one of the "Urängste" of the Germans is the fear of inflation in memory of the hyperinflation in 1923.
In 1932 Germany under Chancellor Brüning issued a 4 Reichspfennig coin (instead of the usual 5 Reichspfennig coin). The intention was to educate the people in economy. Brüning had hoped for a new price consciousness and for lowering of the consumer prices. Each wage paying had to have at least 2 Reichsmark paid in these 4 Pfennig coins. One year later this coin was cancelled.
Finland, a member of the EURO zone, has neither 1 nor 2 cent coins in circulation.
My perception is of Finland being one of the more expensive country in the eurozone (Jyrki please correct me if I'm wrong) whereas I know
Germany to be quite frugal. So Bruening might have
had the right idea. In
Holland, which does rounding in most stores, Aldi has kept the 1 and 2 cent coin and exact change, but for a while a couple of years ago they
had a sign up saying that they would not accept such coins in payment. The sign disappeared after some time and I once again saw frugal housewives using cents to pay, but I don't know whether they reversed the policy because it was illegal, or due to market forces. I recently
had the absurd situation of a Dutch supermarket rounding up an amount to the next 5 cent but then giving me the last 10 cents of my change in 1 and 2 cent pieces. When I pointed out that, if they were going to give me cents in change they can't logically round up, and I'd like the 2 cents I was now owed, the attendant looked at me if I'd two heads. Recently when living in Nigeria they reintroduced the 50 kobo, 1 naira and 2 naira coins and insisted that supermarkets dispensed the last 5 naira as coins rather than a note. This put lots of small coins into the
hands of wealthy supermarket shoppers who put them into a kobo-jar I guess rather than into the
hands of
poor street market women who might have used them. The real need was actuality for coins for larger
denominations, 5, 10 and 20 naira whose notes were among the dirtiest on the planet despite continual new issues by government due to Gresham's law. The
good new notes got hoarded. The coin policy was quietly dropped after a while. For one thing the naira coins (1 naira ~=1 cent) evidently cost more to make than
face value. The policy left a trace in popular culture however - there's a singer called 50 kobo (not just a take-off of 50 cent, but intended to convey
cheap and low-class to the point of absolute absurdity), and Africa's largest bulk-sms provider has the same company name. In the US there is the nonsense of receiving exact change in supermarkets but being unable to spend it in cafes etc due to tipping in round dollar numbers. It seems really inflationary to me as a visitor. The Italians famously supplemented small Lire coinage with candy and chewing gum. As a child in
Ireland I recall postage stamps being generally accepted as small change. All in all, from the many examples I've seen, I think it is
wise for governments to pay some attention to the value of small change in curbing inflation and encouraging commerce, but also to recognise that in the end you can't
buck the market wishes.
Rome got caught in the same dilemma, issuing 1 and two
uncia coins for a century after they
had any market use. They are now all extremely
rare.
