Australia’s five and ten cent coins could soon disappear forever after demand for the currency has halved over the past five years.
Royal Australian Mint chief executive officer Ross MacDiarmid predicted the natural ‘death’ of the coins in January but the pandemic is expected to quicken the coins’ demise.
‘There’s no doubt there has been a significant decline in demand for circulating coin over the last five to six years. Decline in demand for coins (is) roughly 55 to 56 per cent,’ he told the ABC.
The currency is made from copper and nickel but a sharp rise in the value of the metals has impacted the Mint’s finances.
Currently the metal in a five cent coin is worth just over three cents, leaving little room for profit.
The profit made by the Mint on coins is called ‘seigniorage’, however in its last annual report the institution reported a 47 per cent drop below budget to $26 million.
In spite of the decline in circulation and profit, MacDiarmid said the Mint would not force the demise of the smaller currency.
In the early 1990s the Australian one and two cent coins were discontinued but today an unused coin in mint condition can be worth up to $15.
Meanwhile a circulated one or two cent piece can fetch up to $3.
The Reserve Bank of Australia also recorded a steep decline in the use of cash since the beginning of the pandemic.
RBA Assistant Governor Michele Bullock said in a June speech the global pandemic ‘is having dramatic effects on economies around the world’.
‘In recent years, substantial innovation in the payments industry has furthered these trends and also widened payment options,’ she said.
‘The introduction of contactless payments has made it quicker and easier to make lower-value transactions by card, eating further into the traditional domain of cash transactions.’
The RBA also found almost 25 per cent of consumers still primarily use cash and most of those people tended to be elderly or lower income earners.
Bullock said cash withdrawals from ATM’s also experienced a rapid decline in recent months.
‘ATM withdrawals have been on a trend downward decline for a number of years,’ she said.
‘But the decline seen in March and April was a substantial downward shift in the level of withdrawals.
‘It seems likely that a large part of this will become a permanent change in behaviour.’