For the first time ever, the UK Treasury has decided not to order new 1p and 2p coins. This huge decision has put a question mark over the future of the small change. The government failed to place its usual order with the Royal Mint this year and has no intention to do so in the coming years. This development is reported by the Evening Standard.

Fewer People Using Cash

One reason for this change is that fewer people are using cash these days. Increasingly, more and more people prefer to use their cards or make a digital payment for the same rather than opting for coins and paper money. Because of this, the 1p and 2p small coins are not in demand as before. Officials from the Treasury will hence decide if it makes sense to stop the production of these coins at all.

Enough Coins in Circulation

A spokesman from HM Treasury said that the Royal Mint strikes coins after considering the requirement, existing stocks, and the industry’s demand. At this moment, they think that there are enough coins in circulation – approximately 27 billion in the UK alone. For this reason, the Treasury does not intend to change the denominations of the coins in circulation.

Discussions on the Future of Small Coins

Ministers will meet to discuss the fate of the 1p and 2p coins with government ministers. If implemented, it would be the first time since 1984 that a coin had been taken out of circulation in the UK – when the half-penny was withdrawn. The Royal Mint says that no new 2p coins have been produced since 2021, with none having been produced during the period from 2018-2020 either.

Role of the Royal Mint

The major job of the Royal Mint is to strike coins for the UK. In conjunction with the Treasury, they ensure that there are adequate coins in supply for the cash centers in the UK and assure they will continue doing so.

New Rules for Banks

At the same time, new rules come into force in the UK that will ensure people can still access cash easily. The new rules, being introduced by the Financial Conduct Authority, the UK’s financial watchdog, are to begin on 18 September.

Giving Access to Cash

The new rules won’t stop banks from closing branches but will ensure that, if they close a branch, banks do something to help people get access to cash. The FCA found that about 3 million people still rely on cash for their daily needs. Many of these people come from low-income households, and most of them might not have easy access to digital means of payment.

Helping Small Businesses

According to Sheldon Mills, the executive director of consumers and competition at the FCA, many small businesses still need to find a place for their daily takings. The FCA acted swiftly to use powers new given by parliament to ensure that easy and access to withdrawal and deposit of cash are maintained.

Conclusion

Conclusion: The decision reached by the UK Treasury not to order new 1p and 2p coins is based on the fact that people are using less and less cash. There are already sufficient coins in circulation, and the Royal Mint will continue to produce them as needed. New regulations are also being introduced to make sure that people can carry on using cash even if bank branches close. The reforms recognise the UK’s move towards a cashless society, but also take into account the interest of those who still have to use cash.