News in Brief

Slovakia Next to Drop Euro Coins?

Slovakia may be the next EU monetary union participant to drop the two lowest denomination euro coins. The Slovakian cabinet has issued a draft revision to the law on prices and, if passed by the Slovakian Parliament, the new pricing rules would become effective 1 January 2022.

According to findings in a May Eurobarometer survey, more than five out of six Slovaks surveyed are in favour of scrapping the 1 and 2 euro cent coins. This is a higher number of people favouring dumping the two denominations than wanted to drop them in Belgium, Finland, Ireland, and the Netherlands, all of which have dropped the coins. Italy has also dropped them.

The European Commission is itself considering the removal of the one and two cents throughout the eurozone and the introduction of uniform rounding rules. It launched a consultation this time last year, and has stated that it will reach a decision by the end of this year.

Changes Ahead for US Currency

US currency is due another redesign, and the Advanced Counterfeit Deterrence Committee, part of the Bureau of Engraving and Printing, is reported to have recommended changing the substrate of the $10 and $50 banknotes, the new versions of which are due for introduction in 2026 and 2028 respectively. The $20, $5 and $100 will follow in that order in roughly two-year intervals.

Separately, the Federal Reserve’s US Currency Education Program has launched a new, free app called Cash Assist to help cash handlers across industries identify the security features of US currency.

Users scan a banknote with their smartphone’s camera into the app’s ‘Denomination Detector’, which reveals all of the unique features that are present in the identified denomination. The ‘Tilt Check Simulator’ feature can be used to see how the features of the banknote function when in motion.

Cash Assist was developed as a handheld, training companion to the program, but anyone can use it. The app does not authenticate banknotes, but it does provide individuals with the skills to self-authenticate notes on their own and offers instructions on how to report suspected counterfeit notes. The app currently is only available for Android devices, but an Apple iOS version is planned for launch later this year.

Euro Members to Rise to 21

Croatia and Bulgaria are both on course to become the next two EU member states to adopt the euro, bringing to 21 the number of member states in the eurozone.

Croatia, which joined ERM II – the final stepping stone in the path to euro adoption – in July 2020, has now been given the green light to start producing euro coins ahead of its entry into the single currency on 1 January 2023.

In Bulgaria, which also joined ERM II in July 2020, a draft Plan for the Introduction of the Euro in the Republic of Bulgaria has been published, and put out for public discussion. Bulgarian intends to join the eurozone on 1 January 2024, assuming all convergence criteria have been met.

UK Pennies Back in Production

UK penny coins were back in production last year after none were minted for general circulation in the previous two years, according to new figures from the Royal Mint.

COVID lockdowns meant that many coins were hoarded at home, requiring some to be produced for use in the economy. As a result, some 88 million new 1p coins were minted in 2020 – still well below the levels seen before the two-year pause.

The figures show that no new £2 coins have been minted for four consecutive years, however, and no new 2p coins have been produced for three years.

The Royal Mint has previously stated that it had no plans to resume production of these coins for 10 years, owing to a coin mountain that exists while demand has dropped. This coin mountain is partly a consequence of the replacement of the £1 coin, which resulted in a massive inflow of not just old £1 coins, but other denominations as well.

Overall, 330 million coins were released into circulation in 2020, well down on production levels seen in recent history.

Pandemic Hits Profits at FNMT

Fábrica Nacional de Moneda y Timbre (FNMT) has published its annual report for 2020, which shows sales of €248 million, a reduction of 5.4% compared with 2019 due to reduced demand caused by the pandemic, particularly from March-May 2020. Profit was down by 32% to €22.1 million.

FNMT has invest €60 million in recent years to upgrade its paper mill and now has a capacity of 3,200 tonnes per annum. Around half of this capacity was utilised in 2020. 50% of paper produced was for IMBISA, the Spanish euro banknote printer. Export orders were secured for the Philippines, Colombia and Argentina.

On the minting side, FNMT produced 915 million euro coins, compared with 1.14 billion in 2019, and 23.5 million coins for export to Andorra and the Dominican Republic.

And at Portals Paper…

Portals Paper, the second largest 2nd largest commercial supplier of banknote paper, saw sales fall by 9% to £121.8 million in its recently published annual report for the year ending March 2021. EBITDA was 20% lower at £8.1 million. The margin reduced from 28% to 26%.

The lower sales and profits were attributed to disruption caused by the pandemic. This mainly affected the company’s division producing passport paper, demand for which dropped significantly.

The company, which employs nearly 500 people, spent £6.8 million during the year on capital investment at its banknote paper mill to optimise flexibility and capacity, and reduce the environmental impact of its operations. In total, the company has invested £21 million over the past three years since it separated from De La Rue. During the year, it invested £180,000 in R&D.

More recently, Portals announced the acquisition of Fedrigoni’s Security business, which produces threads and foils, as well as the option to acquire certain banknote and passport paper assets (including production machinery) from Fedrigoni’s Fabriano division. It also signed a license agreement for the hybrid substrate technology EverFit® with the Banque de France.