Ireland is tackling the cost of cash problem head on by becoming the latest European nation to ditch one and two-cent coins. The country’s central bank says it costs 1.65 cents to produce a one-cent coin, and 1.94 cents to make a two-cent coin.
From October 28th, retailers will round up or down to the nearest five cents. The copper coins will still be legal tender and the ‘Rounding’ process will take place on a voluntary basis.
Rounding only affects cash payments – electronic payments will not change.
Ronnie O’Toole of the Central Bank of Ireland said: “As a country we are good at making changes like this. We migrated to the euro ahead of most other countries, and the indications so far are that consumers and retailers alike will embrace Rounding.”
Charities have voiced some concerns, as lower value coins are often the mainstay of their collections. But Change for Charity and Make-a-Wish are taking advantage of the Rounding drive by asking people to give up their hoarded coins.
According to Ireland’s central bank, the value of one cent and two cent coins issued in Ireland since the introduction of the euro is €37 million.
Debates about the validity of smaller denomination coins have been ongoing for years, with repeated calls in the US to scrap the one-penny coin, which costs the Mint about two cents to manufacture. Congress has tried twice, in 2002 and 2006, failing both times. Six European Union member states have already begun phasing out smaller denomination coins – The Netherlands, Sweden, Finland, Denmark, Hungary and Belgium.
Canada scrapped its penny coins in 2012, while New Zealand and Australia were ahead of the game as they so often are, ditching the one-cent coins in the 1990s. New Zealand has even abandoned its five-cent coin.
Canadian finance minister Jim Flaherty said the country’s one-cent coin was so worthless it had become “a currency without currency”.
Inflation means every nation will probably have to scrap lower value coins at some stage. The fact they still persist in so many countries is a sign of the challenge of getting consumers to change well entrenched habits.