Hungarian media: too expensive Hungarian forint coin may be withdrawn

Minting a HUF 5 coin is more expensive than its value, so a Hungarian political party regularly submits a parliament resolution draft to withdraw it from the market and sell the collected amount as metal. Here is how the Hungarian National Bank answered the questions of HVG, a Hungarian news outlet, concerning the issue. In Hungary, only the Hungarian National Bank can withdraw a coin, the Hungarian Parliament can only submit a bid for action.

Expensive forint coin might be withdrawn?

According to HVG, the lowest Hungarian forint denomination, the HUF 5 coin is probably more expensive to mint than its value. Since Donald Trump decided to ditch the 1-cent coin for money-saving reasons, HVG wanted to know whether the Hungarian National Bank would follow the American president’s example.

They wrote that, currently, there are 3,625 tonnes of coins circulating in the market, so it would not be easy to collect them. Even so, Jobbik, a Hungarian opposition party, which lost a lawmaker just today, regularly submits a draft resolution to the Hungarian Parliament to ditch the HUF 5 coins. In March 2008, the Hungarian National Bank withdrew the HUF 1 and 2 coins from the market.

The Hungarian National Bank disagrees

However, the Hungarian National Bank does not plan to withdraw the HUF 5 coins because the traffic data concerning the coin suggests stable use. There are no reasons for an urgent withdrawal, the institution added. However, the MNB did not tell how much it costs to mint the HUF 5 coins, referring to trade secrets. HVG suggested in their article that it is more expensive than its value.

According to the MNB, it would be expensive to withdraw the coin from the markets. Based on 31 December data, 863 million coins are circulating, weighing 3,625 tonnes. Transporting and storing them would probably generate incredible costs. The MNB said Jobbik’s claim that selling the coins as metal would generate high income was untrue. Since the coins are minted from a special alloy, their components should be separated first, which is technologically not easy, and it is also not cheap. Therefore, the MNB could sell the coins for only a fraction of the original metal price. Thus, the national bank believes it would not be an economical decision. As a result, the HUF 5 coin seems to remain with us and will continue to be the lowest denomination.

Is a new forint note coming?

Interestingly, another Hungarian opposition party, Mi Hazánk (Our Homeland), proposed last year for the governor of the central bank to introduce HUF 50,000 notes. Előd Novák wrote that, due to the high inflation and other reasons, Hungarians needed the new denomination, which would be worth EUR 124. However, Governor György Matolcsy replied that there was no reason to introduce the new note.

Read also:

• Rapid appreciation: Hungarian forint surges to 4-month high against euro and dollar
• PM Orbán sets out Hungary’s position on euro adoption – read more HERE