November 19, 2013 – Ireland may soon be joining Finland and the Netherlands in dispensing with 1 and 2 euro cent coins, if a current two month ‘rounding’ trial involving more than 240 businesses in the Irish town of Wexford proves a success. The trial, which takes place from mid-September to mid-November, is being run by the Central Bank of Ireland. All cash transactions will be rounded to the nearest 5 cents, although prices of individual goods and services remain unchanged, with only the total bill rounded. Customers are free to refuse to take part.
The trial is part of Ireland’s National Payments Plan, published in April, which is looking to reduce the economy’s dependence on cash and encourage the development of cashless and e-transactions.
According to this plan, the efficiency of Ireland’s existing payment systems infrastructure could be improved by changing behaviour to make more use of secure and efficient electronic payment methods leading to a reduction in the reliance on cash and paper instruments.
In particular, it notes that Irish people withdraw almost twice the amount the average European does from ATMs every year, and that it is one of the least efficient countries in Europe in terms of the ratio of cost of payments to GDP. The standard in the euro zone is 1.2%, while the cost of Ireland’s payment system is estimated at 1.4%. If, says the plan, Ireland were to match best practice in Europe (ie. 0.6%), then savings of up to €1 billion per annum could be made to the economy.
An added impetus for the trial is that, according to the Bank, the one cent costs 1.7 to mint and the 2 cent coin more than 2. The result is that the Bank, which has issued €30m worth of the coins since the euro’s introduction, has spent well in excess of this in producing them.
The Wexford trial will help to test how reducing the number of coins in circulation through rounding works in practice and provide a chance to assess the reaction of consumers and retailers. Ahead of the launch, a major public information campaign took place, involving leaflets, print and radio adverts, a dedicated Web site and a Twitter handle.
This article appeared first in the October issue of CurrencyNews. To learn more about this periodical click here.
You can find a detailed article by Richard Giedroyc on that trial in Wexford at Numismaster.