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Royal Mint Halts Production of 2p and £2 Coins

Author: Jon Clarke - Bullion & Economics Editor

Published: 18 Sep 2020

Last Updated: 21 Sep 2020

Synopsis

Due to the drop in demand and the mountain of coins in storage, the Royal Mint will not produce 2p and £2 coins for the next 10 years. 

Cash Transactions Fall

According to a recent report by the National Audit Office (NAO), cash was only used in only 3 out of 10 transactions in 2019, down from 6 out of 10 in 2010. The NAO report that authorities were in danger of leaving those that need cash at risk, as the pace of digital payments increases. 

The elderly and poor are believed to be the most at risk, due in part to the 17% of cash machines being closed down in the last two years.  

Coin Hoards

The rise of digital payments has led to an unused hoard of every coin denomination at the Royal Mint with £2 coins exceeding its target by 26 times. A Mint spokesman said that production could possibly return if needed.

Alternately, demand for banknotes has increased with the whereabouts of £50 billion’s worth in question but suspected to be overseas or being used in the shadow economy. 

The War on Cash 

The falling demand for cash, local bank and ATM closures, and the halted production of certain coins all feed in to the idea of a government attempt to move to cashless transactions. Chief Bank of England economist, Andrew Haldane, made an argument for a cashless society in 2015, much to the chagrin of economists and even some of his colleagues. 

With the continued debasement of national currencies through low interest rates and easy credit, inflation is by far the more obvious concern. Rising prices could also lead to the fading out of lower denominated coinage, and with commodity prices, and (market driven) digital currencies seeing increased demand in recent months, it wouldn’t be impossible to imagine the move to alternate form(s) of exchange IF our paper currency were to become useless. 

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