Will 5-forint coins disappear in Hungary because of inflation?

An MP of opposition party Jobbik proposed to the National Bank of Hungary to withdraw the 5-forint coins from circulation because it is no longer profitable to issue them. Therefore, Péter Balassa would like György Matolcsy, the governor of the Hungarian national bank, to issue a decree withdrawing it as soon as possible.

According to 24.hu, Mr Balassa submitted a proposal to the parliament reminding it that the national bank withdrew the 1- and 2-forint coins in 2008. The decision meant a 3-4 billion HUF (7.5-10 million EUR) plus revenue for Hungary’s state budget. However, since then, the inflation of the Hungarian national currency has accelerated. Therefore, the value of the 5-forint coins does not reach its gate price. One coin is worth more as non-ferrous metal scrap than money.

One coin weighs 4.2 grams, made of copper, zinc and nickel. 238 pieces weigh 1 kilogram, which is worth 1,190 HUF (3 EUR). However, you can sell 1 kilogram of household brass waste for 1,500 HUF (3.77 EUR). As a result, it is more worth selling the coins as waste than use as money. According to Balassa’s calculations, the profit reaches 300 HUF (0.75 EUR) per kilogram.

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On average, the waste price can be multiple times the cost of the war material. If we calculate only with brass, 1 kilogram of raw material costs 6,000 HUF (15 EUR), which makes the cost of producing one 5-forint coin 25 forints. Furthermore, that price does not include the cost of nickel and zinc incorporated, the money spent on the production, transport and storing, etc. Moreover, based on press information, 62 percent of the users think we do not need those coins.

If the national bank withdrew the 5-forint coins, it could save billions of forints (millions of euros). Jobbik would give that money to the social sector struggling with a lack of government financial support for a long time.

The forint currency system was introduced in Hungary on 1 August 1946, mnb.hu writes. Individual pieces of the coins series from the 2 fillér to the 5 forint coin (2, 10 and 20 fillér as well as 5 forint coins) issued in 1946 remained in circulation for more than 30 years, while coins of these same denominations but made with different material composition, weight as well as various obverse and reverse were also issued, often following the changes in the form of government and the arms of the nation. Some of these coins were in circulation only for a few years, but most of them for 30-40 years.

Currently, the smallest denomination is the 5-forint coin, while the biggest is 20,000 HUF. The national bank withdrew the 1 and 2-forint coins on 1 March 2008.

Read alsoRecord weak forint: Hungary’s national bank is ready to fight

Source: 24.hu, mnb.hu