ECB currency intervention of a different kind

May 17, 2011

The ECB recently engaged in an unusual bit of currency intervention that went entirely unnoticed by the world’s financial markets.
In a manner of speaking the move was aimed at preserving the strength of the euro but not in the way you might think.
This time it stepped in to stop euro coins becoming thinner. More than ten years since the euro’s introduction, EU lawmakers are in the process of setting the physical dimensions of euro coins in stone.
Thinking it what be a simple job they copy-and-pasted the original sizes set out back in 1998. Unfortunately, however, those dimensions were never really used by euro zone minters. If you measure a one euro coin for example, it is likely to by 2.33 mm rather than the 2.125 mm that was originally stipulated, while a 2 euro coin will be 2.2 mm rather than 1.95 mm.
The ECB therefore ruled that to avoid confusion and all the hassle involved in replacing every ticket machine in the euro zone, the best approach would be to change to numbers on the legal document.
Seems a sensible move, the only question I guess is do bigger coins carry a greater inflation threat?

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