As the sales tax increase to 8 percent began on Tuesday, demand for small change is expected to increase as well. Japan’s only supplier of ¥1 coins, Akao Aluminum Co., has just completed producing 26 million faceless 1-gram aluminum slugs in March, which were then forwarded to Japan Mint in Hiroshima to stamp the “1” symbol and the year on one side, while a symbol of a tree will be placed on the other.
As Japan’s coins come in ¥1, ¥5, ¥10, ¥50, ¥100 and ¥500 denominations, economics professor from Seijo University in Tokyo Masao Nakata said, manufacturing more coins is the solution for a possible shortage that comes with an increased tax. Shortage in coins affected retailers in 1989 when the 3 percent tax was introduced then. Production Manager of Akao Aluminum, Yoshinori Nakao said, “We still have orders to make another 30 millions coins.” The order comes with Prime Minister Shinzo Abe’s increased sales tax, which hopes to decrease the nation’s debt and to encourage inflation in an economy drowning in decades of falling prices. At the end of this year, Japan’s debt will amount to 242 percent of its economy, says the International Monetary Fund.
Despite the orders of more coins and the worth of the 26 million coins at $45,000 based on the London Metal Exchange, Akao, founded in 1960, will not earn any revenue from the first order as it required four new employees to come out of retirement and refurbish the inactive machinery. Using coins remains a popular form of payment in Japan in spite of the digital age, where cybertheft is also prevalent. According to the Bank of Japan, around ¥4.6 trillion coins are in circulation since December. As consumer prices are expected to increase by two percent by April next year, the Finance Ministry is anticipating a spike in coin usage. For the ¥1 coins alone, there are 38.8 of these in circulation. Spokesperson for Seria Co., a chain of ¥100 stores, Yoko Matsuda said, “We’ve tried to calculate extra coin demand using several scenarios. We do expect an increase in demand.”