Given the current state of the health service, the impending credit crunch, crime and the daily revelations about Bertie’s hysterical (sorry, I meant historical) financial state, a debate on getting rid of the smallest coins in our currency is hardly high on the agenda. However, this does not mean that the issue doesn’t merit our attention.
The 1 and 2 cent coins currently in circulation, or mostly stashed in penny jars throughout Ireland’s homes, are rapidly becoming redundant. A recent report stated that producing the 1 cent coin costs 1.3 cent and the 2 cent coin costs 2.4 cent. It makes no economic sense to have a coin costing more to produce than its financial value. Indeed the various mints that produce the coins have to sell them to the financial institutions at face value. This might not be so bad if there was a low production rate of small coins but, possibly because people tend to hoard them, their continuous production is necessary.
Some countries have already started the phase out. Finnish and Dutch businesses and banks employ a method known as ‘Swedish rounding’ when tallying sums. Due in large part to the inefficiency of producing and accepting the 1 cent and 2 cent coins, Finland has opted to remove these coins from general circulation in order to offset the cost involved in accepting them. (They are still legal tender and are still minted for collector sets as required by the European Monetary Union (EMU) agreement.)
While individual prices are still shown and summed up with 1 cent precision, the total sum in Finland and the Netherlands is then rounded to the nearest 5 cent. Sums ending in € 0.01, € 0.02, € 0.06 and € 0.07 are rounded down to the nearest 5 cents; sums ending in € 0.03, € 0.04, € 0.08 and € 0.09 are rounded up to the nearest 5 cents. This seems to be a simple enough way of working things out.
Although it all sounds like small change, it would appear that banks and retailers would save a great deal of time and money by no longer processing these little coppers. The Dutch Central Bank calculates that businesses in the Netherlands will economise about €20 million euro a year in processing costs when they are phased out completely. The decision won’t be taken by Europe though. The European Central Bank has no authority on the matter. While it’s responsible for setting the common currency, it can’t dictate how each country uses the coins. That’s up to individual Finance Ministers, who order the national mints to produce whatever number it deems appropriate for each denomination. However, each euro country will always have to accept the small coins as legal tender. Retailers in the Netherlands and Finland must still accept the 1 and 2 cent pieces on the rare occasions that foreigners use them, but shopkeepers won’t give the coins as change.
So what is stopping a blanket decision on getting rid of them? Well, Germany, particularly, has been very vocal and it would seem that on the retail front the old marketing ploy of a 99c ending on a price is more attractive to the consumer. They still believe that a 1.99 price tag will grab the consumer better than a €2 cost. Retailers in the Netherlands solved that problem by keeping individual tag prices the same and rounding only the final bill to the nearest 5 cent. Also the system applies only to cash transactions. All credit card and cheque payments stayed at their original amount. I suppose all in all it is a move towards a cashless society which some believe would eventually lead to an even greater ‘Big Brother’ like hold on the world. However, that would be a long way off and although the initial scrapping of the little ones might set that train in motion, it would be along way down the track before cash could disappear completely.
Of course it is us, the consumer, who will need the most convincing. To get shoppers in the Netherlands on board, officials ran a pilot price-rounding scheme in just one town first. It proved extremely popular and was adopted nationwide.
Like most people, we have a vessel at home for loose change. Every now and again I will get around to counting it into change bags. It is a tedious task but one that always brings great joy by the time I get to the final amount. There has often been a meal out or a new pair of shoes lurking in all that metal. However, I admit that I tend to only count the 50, 20 and 10 cent pieces, promising to sort the coppers some other time. Inevitably the 1, 2 and 5 cent coins get put back in the jar every time. Recently I have taken to putting the little coins I get in change into the charity boxes found on most shop counters. Although I am sure the charities appreciate any donation, I often feel a little guilty about the poor soul who has to eventually count it all up. If you spend an hour bagging and sorting dirty little coppers and all you have is a tenner it must be disheartening.
Maybe Waterford could offer to be the pilot centre. Maybe the retailers and banks could pledge a yearly donation to local charities from any savings that they will make. This could work out very well for all concerned. There was a time when loose coppers hanging around the end of a handbag or the ashtray in a car had some value. There was always a bar of chocolate or ten cigarettes in coins to be gathered. With the abolishment of the pack of 10 and the average bar of chocolate costing close to a euro, who needs the coppers now, particularly when they are so fiddly. Even with our old money at least the penny and the two pence coin were a decent size to handle. It’s definitely time to start the debate because, really, we have little to lose.