The Reason for Minting 100 Million 1-Yen Coins in the Age of Cashless Payments
As cashless payments spread, 1-yen coins are being mass-produced for the first time in 11 years. The initial production plan of 20 million coins has been increased to 132 million.
In recent years, almost no 1-yen coins have been minted for circulation. Suddenly, it is on a scale exceeding 100 million.
Why increase 1-yen coins now, in the age of cashless payments?
At first glance, it might seem like cash payments are increasing. However, this mass production is not a return to cash.
It is to replenish the 1-yen coins needed in the market before they run out.
Even if cashless payments increase, transactions in 1-yen increments remain.
Even as cashless payments spread, small cash transactions have not disappeared. Cash is still used in convenience stores and local shops.
If you buy a 298-yen item with cash, you need 2 yen in change from 300 yen. Even if fewer people use cash than before, as long as cash payments remain, shops will need 1-yen coins.
Furthermore, the figures indicating the spread of cashless payments are mainly based on the amount paid. While the ratio increases significantly when high-priced items are bought with cards, it does not necessarily mean that small cash transactions have decreased at the same rate.
Even 100 million coins is only about 0.4% of the total.
Hearing 132 million coins makes it feel like a significant amount. However, there are about 36.4 billion 1-yen coins in circulation.
The 1-yen coins being minted this time account for only about 0.4% of the total. Rather than significantly increasing the number of 1-yen coins, it is a scale that partially replenishes what has been suppressed for a long time.
In the past, about 2.77 billion 1-yen coins were minted in 1990, when the introduction of the consumption tax coincided with the bubble economy. That is more than 20 times the current amount.
Looking only at the figure of 100 million, it feels large-scale, but from the perspective of all 1-yen coins, it is not that large an increase.
1-yen coins at home cannot be used at shops.
It is important not only how many 1-yen coins there are nationwide, but also where they are. Even if you have dozens in your wallet or piggy bank, they will not return to shops or banks if you do not use them.
You occasionally shop with cash and receive small change, and then return to cashless payments. When such usage increases, 1-yen coins tend to accumulate in households.
Even if the coins themselves exist, the 1-yen coins that shops can use as change do not increase. Due to the shift to cashless, the speed at which coins return to shops and banks may also be slowing down.
They are left over at home, but are in short supply in circulation.
Such things also happen.
Old 1-yen coins are being collected
Coins cannot be used forever once they are minted. Damaged or deformed ones are collected from circulation and returned to the Japan Mint.
Until now, the number of 1-yen coins in circulation had been on a downward trend. This is because demand had decreased due to the shift toward cashless payments, and there was enough supply without minting new ones.
However, from fiscal year 2024 onward, the decline in the number of coins used in society has leveled off. While demand for 1-yen coins remains, the collection of old coins continues.
If we do not replenish new 1-yen coins and only proceed with collection, there is a risk that the number of coins available for change at stores will become insufficient. Therefore, the production plan, which was initially 20 million coins, has been increased to 132 million.
Rather than a sudden surge in demand, this is an increase in production to maintain the circulating volume, which had been continuously reduced, at a necessary level.
While there is a view that this increase in production might be in anticipation of a consumption tax cut on food, the Ministry of Finance denies this. The decision was made after confirming the number of coins in circulation and the inventory held by the Bank of Japan.
Summary: Not a return to cash, but a replenishment of necessary amounts
Just because 132 million 1-yen coins are being minted does not mean we are reverting to cash payments. Even as cashless payments advance, small-amount cash transactions remain.
There are also 1-yen coins that are sitting idle in households, and old coins are being collected. This mass production is a replenishment to prevent a shortage.
The figure of 100 million may seem large, but it accounts for only about 0.4% of all 1-yen coins in circulation.
1-yen coins are not used as much as they used to be.
Even so, they have not yet become unnecessary.