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Eastern Caribbean Central Bank to take some coins out of circulation

Eastern Caribbean Central Bank to take some coins out of circulation

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Come July 1, 2015, commercial banks in the East Caribbean Currency Union (ECCU) will stop issuing one and two cents coins.

However, persons will still be able to use the coins to conduct transactions for up to five years after this date.

During a live simulcast of a discussion {{more}}put on by the St Kitts based Eastern Caribbean Central Bank (ECCB) and shared with media practitioners from Anguilla, Grenada, Antigua, Montserrat, Nevis, Grenada, St Lucia, Dominica and St Vincent and the Grenadines on Tuesday, matters surrounding the impending implementation of the phase out were discussed.

Making the presentation on behalf of the ECCB, director of the Currency Management Department Pamela Osborne said, in analyzing the usage of the one and two cent coins over a particular period, they noted a huge disparity between issuing and redemption.

“This means that the coins are not getting back into the financial system,” she stated.

As a result, Osborne said the Monetary Council at its 81st meeting, on February 24, 2015, made the decision that the ECCB will phase out one cent and two cents coins from circulation.

She noted that a study conducted by a Canadian financial institution revealed the economic cost to the private sector, including commercial banks, of counting, storing and transporting the coins was approximately $150 million annually.

For the ECCB, Osborne said their cost is mostly incurred on the production end.

“Producing the one and two cent coins costs the bank more than the face value of the coins. The one cent can cost up to six cents to produce and the two cents can cost in excess of eight cents to produce. From the ECCB standpoint, we are looking at the production cost and the inefficiency of producing those coins and having them in circulation.”

Osborne said the coins will continue to have legal tender for a period of no less than five years. At that time, the ECCB will make a determination whether the period will be extended.

To aid with the smooth transitioning of the phasing out process, Osborne said the ECCB has come up with a rounding system to facilitate cash transactions only.

“If one purchases an item and will be required to receive change, they will not get change in one and two cents. What will happen, the amount that is to be given back will be rounded up or down to the nearest five cents increment,” Osborne explained.

For example, change that will end with one, two, six or seven cents, will be rounded down and change that ends with three, four, eight, or nine will be rounded up.

“Change of $1.01 will be rounded down to $1.00 … In the same way, change ending in six cents and seven cents, will be rounded down, but in those two instances they will be rounded down to five cents. The one and two cents coins will be rounded down to zero and six and seven to five cents.

“On the contrary, the rounding up will take place if the cost of an item ends with three or four cents and change is to be given back to the public. The $1.03 will be rounded up to $1.05. Items costing $1.04 will be $1.05. If they are eight and nine cents, they will be rounded up to $1.10,” Osborne explained.

With this proposed new system, the cost for individual items will be not be rounded and only the final total for the items purchased (inclusive of VAT where applicable) will be rounded.

Payment with the use of debit/credit cards and cheques and with exact change will not be rounded.

Obsorne encouraged businesses to continue accepting the coins and to use rounding guidelines and that the rounding guidelines should be displayed at check points and at cash desks.

With the imminent change, she said it is her hope that businesses will not adjust prices to facilitate the initiative.

“The prices, as they are, remain in place. The adjustment will take place following the rounding…,” she said.

There will also be a public education campaign entitled: “Less cents makes more sense.” The campaign, which will begin in one week’s time, will run up to the implementation date and beyond.

Obsorne further stated that cashiers will be trained to implement the system and presentations will be made to various groups.

Deputy governor of the ECCB Trevor Braithwaite also made a presentation at the simulcast.(KW)