"The reasoning provided by the written declaration for the introduction of low-denomination notes is frankly without foundation, nor is any attempt made to justify assertions made", said Euromat President Eduardo Antoja. "Indeed, Mrs. Sartori's assertion completely contradicts studies conducted by the Eurobarometer," Mr Antoja said. "While she makes the assumption that "many European citizens are still unhappy about the euro", the Eurobarometer survey shows that a majority of respondents continue to believe that the euro is, on the whole, beneficial for their country, with 53 percent indicating this opinion for the EU-12 average. Furthermore, the Flash Eurobarometer 165 indicates that only 29 percent of respondents in the 12 euro zone countries would like the introduction of a EUR1 banknote when replying to the question "Would you personally like a EUR1 banknote to be issued?" The only two countries which support the issuing of a EUR1 banknote are Greece and Italy."
The European Central Bank (ECB) already conducted a study involving the members of the Euro Cash Users Group - including Euromat - and the Governing Council of the ECB, which led to the conclusion that the negative aspects of introducing very low-denomination banknotes outweighed the positive ones; the printing of a EUR1 note is in fact more expensive (and less durable) than minting a EUR1 coin. The coin-operated amusement industry made great financial sacrifices to adapt their machines to the euro with direct costs for this estimated at EUR525 million. Because of this extraordinary investment, the sale of new equipment was abnormally low for all of 2002 and 2003, causing additional financial burden to the manufacturing side of the industry. The introduction of low-denomination euro notes would mean yet another wave of high cost for the sector, coupled with slow sales because of uncertainty as the debate continues.
The cost breakdown and impact would be as follows:
- Investment costs for adapting gaming and amusement machines to EUR1 and EUR2 banknotes would amount to EUR1,575,000,000 (approx. 750,000 payout machines at EUR1,500 each, plus 1,000,000 amusement machines at EUR450 each). Machines would have to be equipped with bank note validators, which are at least three times more expensive than coin validators.
- Most jurisdictions do not allow pay-out machine prizes to be paid using notes. Therefore, even if accepting notes, they would continue to pay out the prizes using coins, requiring constant refills. The additional cost is evaluated at no less than EUR1,875 million per year (50 refills per machine per year at EUR50 per refill for 750,000 gaming machines).
- Amusement machines, in particular payout or "fruit machines", contain large amounts of cash. As paper money is much easier to carry than heavy coins, the machines will become an easier target for thieves.
- Where machines can accept notes, the operators would have to regularly refill the machines with coins, as the input (notes) could no longer be used to provide the output (coins). This additional distribution of money would cause security problems with regard to the refilling of machines if notes are stored in the machines.
SOURCE: MD Associates http://homepage.mac.com/mdassociates/news.
