Just over half of the members of the European Parliament – 371 out of 732 deputies – have signed a resolution calling for the European Central Bank to issue €1 and €2 paper banknotes in place of the current €1 and €2 coins. The argument for the initiative is odd:

News agency Apcom reported that the initiative, the brainchild of MEP Amalia Sartori (Forza Italia), aims to combat the ‘psychological’ devaluation brought about by the perception that coins have an inferior worth compared to notes.

The monetary authorities have rejected the idea:

But the whole idea has been scorned by the Economics and Monetary Commissioner, Joaquin Almunia and by the European Central Bank.

I suspect that the ECB knows that coins last longer, so they generate a larger seigniorage profit for the ECB.

Here’s a suggestion: instead of forcing a conversion to notes, at ECB expense, why not make it optional and at private expense? Let commercial banks issue €1 and €2 notes at their own expense, just as the banks in Scotland and Northern Ireland currently issue banknotes as low as £1 at their own expense. Let members of the public use notes or coins as they prefer.