At the other end of the denominational scale, the government says the £50 note is believed to be rarely used for routine purchases and is instead held as a store of value.
In a consultation document, the Treasury said that two thirds of 1p and 2p coins were used in only one transaction before being abandoned to savings jars or thrown away.
Previously, the government and the Royal Mint have needed to produce more than 500 million 1p and 2p coins each year to replace those falling out of circulation. It added: "There is also a perception among some that £50 notes are used for money laundering, hidden economy activity and tax evasion".
"From an economic perspective, having large numbers of denominations that are not in demand. does not contribute to an efficient or cost-effective cash cycle", the document said.
Conservative former chancellor George Osborne was reported to have been weeks from scrapping pennies in 2015, but was stopped by then prime minister David Cameron.
But it says the cost of industry processing and distributing low denomination coins to make up for those taken out of circulation is the same as for high denomination coins, making the cost high, relative to face value and utility. "The writing looks to be on the wall for 1ps and 2ps".
Could we soon be saying goodbye to 1p and 2p coins? "By 2016 it had fallen to 4bn, and by 2026 it is expected to fall to 1.3bn".
However, the Treasury said in its consultation that cash was not obsolete, an estimated 2.7 million people in the United Kingdom entirely reliant on it.
The Cash and Digital Payments in the New Economy consultation released by the government questions whether the current mix of eight coins and four banknotes meets modern needs, and if not "how should it change?".