The Bank of Estonia has come up with a plan to reduce the use of 1-cent and 2-cent coins before eventually removing them from circulation.
The central bank floated a proposal at the tax environment forum to discuss how to start rounding off cent values at vendors up and down to the nearest 5 cent-rounded amount in order to reduce the use of 1-cent and 2-cent coins in Estonia.
“On average two truckloads of 1 and 2-cent coins exit the Bank of Estonia every year that are handed as change to buyers in shops and are used very little after that. The proposal of the central bank is to discuss if there could be less of those cents in circulation that are very seldom used by the people,” the central bank’s vice president, Madis Muller, said.
Whereas people could continue to pay with 1 and 2-cent coins for purchases also in the future, such coins would no longer be handed back as change. According to the central bank, the end price would have to be rounded off only in the event of cash purchases, whereas with card payments the exact amount could continue to be charged.
For vendors, the rounding would mean having to update the software of cash registers.
According to Nele Peil, manager of the Estonian Traders’ Association, the rounding would be good both for vendors and consumers in the broader view, as clerks in stores would have to spend less time counting coins and businesses would have to spend less time on procedures related to them as well.
Peil said that as things stood now, the lowest-value coins were mostly discarded later, as many people found using them too troublesome.
According to recent opinion polls, more than half of Estonian residents are in favor of rounding. A poll of financial behavior taken in September 2017 indicates that 57% of Estonian residents are in favor of it, 33% do not support it, and 10% are unable to say.
As a next step, the Bank of Estonia will gather feedback to the proposal from various interest groups. (ERR/Business World Magazine)