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