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Ireland experiments ditching 1 and 2 cent coins

Categories : Cash is efficient
October 28, 2016
Tags : Central Bank, Coins, Denomination mix, Efficiency, Europe
The Central Bank of Ireland has conducted a trial to round transactions to the nearest 5 cents
Press Release

With the first anniversary of the introduction of rounding approaching, the Central Bank of Ireland is publishing data on the level of awareness and application of the process nationally. Almost one year on from the national launch of rounding on October 28th 2015, 80% of retailers are applying rounding, according to a survey carried out by RGDATA among its members.

Separately, a RedC opinion poll commissioned by the Bank finds a 75% awareness rate among the public, while 93% of people who were surveyed think that rounding is a good idea or makes no difference.

Rounding was introduced in 2015 following a successful trial in Wexford to help reduce the levels of 1 and 2c coins in circulation, the majority of which were not in daily use. These coins are also unique as the cost of producing 1c and 2c coins was more than their monetary value.  A 1c coin costs 1.65c to make, while a 2c coin costs 2.1c to make.

Coins were being hoarded or even thrown away, and inflation has caused the purchasing power of 1c and 2c coins to diminish by over 20 per cent since their introduction. As a result of rounding, between October 2015 and August 2016, 126 million unwanted coins have been lodged with the Central Bank and the costs of minting replacement coins has fallen.

John Geelon, Deputy Head of the Central Bank’s Payment & Securities Settlement Division said “Rounding is conducted on a voluntary basis for both consumers and retailers, so we’re pleased to see 80% of retailers are applying it and the vast majority of the public surveyed have no issues with the process.  The Bank has received lodgements of 126 million unwanted 1c and 2c coins, which is a sign that rounding is being embraced.  Our experience in rounding has been generally positive and we would urge any consumers or retailers who aren’t rounding to try the scheme.

“For rounding to happen, both the retailer and the customer must accept it; both have the right to use exact change.  Rounding only takes place on the total bill, not on individual prices, so existing price points (for example items priced at 0.99c) remain unchanged.  Rounding does not apply when bills are paid electronically, such as by debit card, credit card or by store card.  Retailers should always make sure to retain a sufficient supply of 1 and 2 cent coins, even if they are adopting rounding as the consumer will always have the right to exact change.”

It is worth noting that the Irish experiment goes against the European Commission guiding principles on legal tender, issued in 2010.

Further information on the Irish trial is available here.