Business

Presence of Japan's ¥1 coins likely to fade further with tax hike

JIJI

Small and silver in color, the ¥1 coin may not have much of a presence after the consumption tax rises from 8 percent to 10 percent on Oct. 1.

In addition to the spread of cashless payments using electronic money or credit cards, an increase in round-figure payments is expected to result in less frequent use of ¥1 coins.

According to the Bank of Japan, there are about 37.5 billion ¥1 coins in circulation, continuing to fall from the peak of about 41 billion in 2002.

Although demand for the coins was expected to rise when the consumption tax rate was raised from 5 percent to 8 percent in 2014, the downward trend continued, with the number in circulation dropping by nearly 10 percent over about 20 years.

Koichi Haji, an executive at the NLI Research Institute, noted that the trend is a result of the spread of e-money and customer use of store loyalty card points to pay for odd amounts in their purchases.

While around 500,000 ¥1 coins have been minted every year since 2016, they are supplied for coin sets sold to collectors.

Along with the consumption tax hike, the government plans to introduce a system in which shoppers will be given points worth up to 5 percent of cashless payments at smaller stores.

“As the government is promoting cashless, the number of ¥1 coins in circulation will decrease noticeably if the tax rate becomes 10 percent,” Haji said.

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