Phasing out of the 1 and 2 Cent Coins from

Circulation

Currency Management Department

Eastern Caribbean Central Bank

21 April 2015

Overview

• At its 81st Meeting on 24 February 2015, the ECCB Monetary Council (which comprises the eight Ministers of Finance of the ECCB member countries) took the decision to phase out the 1 and 2 cent coins from circulation.

• Effective 1 July 2015, the ECCB will no longer issue the 1

and 2 cent coins to commercial banks. • The ECCB has been engaging in dialogue with

stakeholders to discuss and formulate the most effective plan for implementing this decision of the Council.

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Our Stakeholders

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Phasing Out of

1 and 2 Cents

Commercial Banks

Media

Ministries of Finance

ECCB

Consumer Affairs

Depts & Assn

Business Houses

Non-bank Financial

Institutions

Chambers of

Commerce

General Public Discussions

• Financial Secretaries • Chambers of Industry

and Commerce • Commercial Banks • Non-Bank Financial

Institutions • Businesses • Consumer Affairs

How Can Our Stakeholders Assist?

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Phasing Out of

1 and 2 Cents

Commercial Banks

Media

Ministries of Finance

ECCB

Consumer Affairs

Depts & Assn

Business Houses

Non-bank Financial

Institutions

Chambers of

Commerce

General Public The Media….

You are key to: providing accurate and timely information to the public

dispelling anxiety and fear

assisting the public with the transition

Rationale for the Phasing Out

• Cost – Productivity (Commercial banks and businesses). A study

by a Canadian financial institution revealed economic cost to the private sector, including commercial banks, of dealing with the penny was approx. $150m annually (counting, storing, transporting)

– Production (ECCB)

• Perceived inconvenience of using of 1 and 2 cent coins in conducting cash transactions leading to the accumulation of coins in households

• Perceived low value • Low redemption rate

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Global Experience • The Netherlands discontinued issuance in

2004

• Canada withdrew its penny in 2013

• Barbados withdrew its 1 cent in May 2014

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How Will The Phasing Out Affect The Public?

a. Use of the Coins The 1 and 2 cent coins will retain their value for a period of no less than 5 years

– Persons will be able to use the 1 and 2 cent coins to transact purchases after 1 July 2015

– Persons will not receive the coins from commercial banks

– Persons can exchange their coins at their commercial bank for face value

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How Will The Phasing Out Affect The Public?

b. Rounding System for Cash Transactions A rounding system will be introduced for the settlement of cash transactions only. Totals will be rounded up or down to the nearest 5 cent increment

Rounding Down Rounding Up $1.01 - $1.00 $1.03 - $1.05 $1.02 - $1.00 $1.04 - $1.05 $1.06 - $1.05 $1.08 - $1.10 $1.07 - $1.05 $1.09 - $1.10

Rounding Guidelines will be provided to retailers to assist them with the rounding process

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How Will The Phasing Out Affect The Public?

b. Rounding System for Cash Transactions(cont’d)

• The cost for individual items will not to be rounded

• Only the final total for the items purchased (inclusive of VAT where applicable) will be rounded

• Payment by debit/credit cards and cheques will not be rounded

• Payment with the exact change will not be rounded

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How Will The Phasing Out Affect The Public?

b. Rounding System for Cash Transactions (cont’d)

An example of rounding down

Items Purchased: Oranges $5.22 Milk $3.33 Cash Payment Water $6.21 - Total rounded to $16.95 Sub-Total $14.76 - Cash tendered $20.00 Vat 15% $2.21 - Change given $3.05 Total $16.97 Debit/credit card or cheque – payment is $16.97

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How Will The Phasing Out Affect The Public?

b. Rounding System for Cash Transactions (cont’d)

An example of rounding up

Items Purchased: Grapes $8.54 Orange Juice $10.32 Cash Payment Water $6.21 - Total rounded to $28.85 Sub-Total $25.07 - Cash tendered $30.00 Vat 15% $3.76 - Change given $1.15 Total $28.83 Debit/credit card or cheque – payment is $28.83

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How Can Businesses Assist With The Transition?

• Effective 1 July 2015:

– Continue to accept the 1 and 2 cent coins – Not give the 1 and 2 cent coins as change – Not adjust prices

• Rounding – Round the final price according to the rounding

guidelines – Not round payments received by cheque, debit or

credit card – Clearly displaying the price rounding guidelines at

checkout points/cash desk

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Reaching the Public • Public Education Campaign - Media

– Theme: “Less Cents Makes More Sense” – Jingle – Social Media – ECCB Website – Printed material: Posters, Rounding Chart – Radio and television programmes – News releases, newspaper articles – Training of cashiers – Presentation to Groups

• Partnership with stakeholders/community groups

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We Need You to Make it Happen! How Can The Media Assist?

• Use the Central Bank as your official and primary source of information regarding the phasing of the coins

• Run news stories on the phasing of the coins

• Facilitate interviews on talk shows or discussion programmes

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We Need You to Make it Happen!

How Can The Media Assist?

• Run a tag line with the key messages on the homepage of your website

• Post the posters and rounding chart to your website or social media pages

• Play the jingle on your stations

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Summary

• The ECCB will discontinue the issue of

the 1 and 2 cent coins effective 1 July 2015

• The 1 and 2 cent coins will remain legal tender for a period no less than 5 years

• After 1 July 2015, persons can continue to conduct cash transactions with the 1 and 2 cent coins

• Cash transactions will be rounded to the nearest 5 cents increment

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Summary (cont’d)

• Payment with exact change will not be rounded

• Non-cash transactions will not be affected

• Commercial banks/financial institutions and businesses will no longer issue the coins to public after 1 July 2015

• Persons can present the coins to their commercial bank for face value

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Thank You!