End of road for Japan’s 1-yen coin
Could Japan’s 1-yen coin or ¥1 be ready to join what appears to be a continuing pattern of low-denomination coins being dropped from circulation worldwide? It certainly appears so. The Japanese government has set a goal of increasing all cashless financial transactions to 40 percent by 2025 in an effort to reduce transportation and storage costs linked to using physical cash. This is an increase from 18 percent as of 2015.
In October 2019, Japan’s consumption tax will be increased from eight to 10 percent, a move that will mean there will be one less reason to carry the aluminium composition ¥1 coin as pocket change. Japan saw a noticeable dip in the use of the denomination once before when the tax was raised to five percent.
The Bank of Japan recently indicated the number of ¥1 coins in circulation as of 2017 was approximately 37.8 billion, down about eight percent from the 41 billion circulating in 2002. E-money transactions including electronic money and credit cards were at about ¥5 trillion in value in 2016. This is about seven times the level these transactions had been at in 2008, according to the central bank’s figures.
In recent history, the ¥1 has had a spotty mintage due to fluctuations in its supply and demand. None were minted in 1968. The highest mintage years are between 1989 and 1991. This was in anticipation of increased demand for the coins. This led to more than 35 billion being released into circulation in 1991, up from 24.6 billion coins in 1985. Demand slumped. Between 2011 and 2013 and again between 2016 and 2017, the denomination was only minted for inclusion in mint sets. The coins were struck for circulation in between these years in anticipation of demand that never materialized. The government has now ceased striking the coin for circulation altogether, with no indication any 2018-dated ¥1 were officially released into circulation.
The fact that it now costs about three yen to make one ¥1 recently led Hitotsubashi University Institute of Economic Research Professor Yukinobu Kitamura to quip, “The more coins you make, the bigger the loss becomes.”
Currently the ¥1 is the lowest denomination coin in circulation. (The coin has an exchange rate of about U.S. 0.0089. Other denominations are the 5, 10, 50, 100 and 500 yen. The 1 yen was introduced as a silver coin in 1871. As it weighs one gram and is composed of aluminium, the coin has also been used as a weight; if placed on the surface of still water, the coin will float.
This article was originally printed in World Coin News.