ECCB explains rounding system for phasing out of coins

The two coins will be phased out in July
The two coins will be phased out beginning in July

The Eastern Caribbean Central Bank (ECCB) has sought to explain its rounding system as it prepares to phase out of circulation the one-cent and two-cent coins.

The bank has announced that the phasing out will begin on July 1, 2015 and some people have questioned what would happen to prices of items with the two coins attached to them.

Director in the Currency Management Department at the ECCB, Pamela Osborne, said at a press conference on Tuesday the rounding system will soon come into effect for cash transaction only and not for cheque or credit card transactions.

She said prices of items will be rounded to the nearest five cent increment.

For example if an item costs $3.03 or $3.04, it would be rounded up to the nearest five cent increment and the item would cost $3.05.

If the item costs $3.06 and $3.07, it will also be be rounded to $3.05.

Now if the item costs $3.01 or $3.02, it would be round to zero and item will be $3.00.

Further if the item costs $3.08 or $3.09, it will be rounded to $3.10.

Osborne pointed out that post July 1, business places should continue accepting the coins but they will not be given back as change and the cost of items are not expected to change.

She also give the reason why the coins will be phased out of circulation.

“In analyzing the usage of the one-cent and two-cent coins, over a particular period, we noted that there was a huge disparity between our issues and redemptions, which means that the coins are not getting back into the financial system,” she said.

Osborne said as a result of this, the Monetary Council at its 81st meeting which was held on the 24th of February 2015, made the decision that the ECCB would phase out the one-cent and two-cent coins out of circulation.

“Therefore effective the 1st of July, the ECCB will no longer issue these coins to commercial banks,” she noted.

Since then, she informed, the bank has been engaging in dialogue with stakeholders to discuss and formulate the most effective plan for implementing this decision of the council.

The phasing out will take place over a five-year period, she said.

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14 Comments

  1. The Facts
    April 22, 2015

    Some people have been hoarding the coins. Why would they do that? If there is any coin I would hoard is the 0.25 cents; not one cent and two cents. It could be saved in a piggy bank for approximately one year. Consider how much they would yield to purchase some Christmas items or other. :)
    Anyway it is an excellent idea and decision to phase out those coins. They only cost money for producing and purchasing them. If it will save Dominica and the other islands an exorbitant sum, so be it. All nationals should be elated about that
    Items in Canada which cost $1.99, $2.99, etc., should all be rounded out to $2.00, $3.00, etc. The problem is the sales tax per dollar is 0.13 cents. If this is not changed, we will still have the problem of this give and take a few cents.

  2. Mr. Browne
    April 22, 2015

    I am kind of on the fence for this initiative but it makes more sense to do this as I have seen that more and more 1 & 2 cents pieces on every corner in the city. It’s like ppl have become so comfortable that they don’t mind throwing money away in these times no matter how small it may be.

    The only real question I now have is what happens when we have to buy or sell foreign currency?

  3. Anon Again
    April 22, 2015

    This is nothing news. I’ve been to both Barbados and Canada where the same thing happens.

  4. Pedro
    April 22, 2015

    I agree the financial rational and the efficiency thing but the customer loses out. So an item comes up to $44.02 after tax. How much will I pay? $44.00 or $44.05? Whose loss? Most likely mine. Also how does the business reconcile properly if total costs of items sold is less than receipts? Or maybe it does not matter….I assume the businesses will always be short changing customers. If I get a check for $967.04, will I be short changed 4 cents and should that be ok?

    • Anon Again
      April 22, 2015

      Did you read the story

    • Zandoli
      April 22, 2015

      Pedro
      This is not the first time this has happened. Canada discontinued the 1 cent coil some time ago for the same reason. And as the article clearly stated the merchants must round to the nearest 5 cent In the end, it will be a wash. Sometimes the merchants will hand out 2 cents more and sometimes they will get an extra two cents. It is a zero sum game, so at the end of the year, most everybody will come out even.

      But as I stated in another post, will it really matter if you are short 2 cents on a $5 or $20 transaction?

    • Question
      April 22, 2015

      Seriously, did you read the article? My bad … reading to understand and educate oneself is WAY different from reading to provide a response, especially when there is already some perceived injustice from any type of news or change. Try reading it again dear.

    • Jam Rock
      April 22, 2015

      The cost of the item will be rounded off before tax. So when the 15% VAT is added you will not have 1 or 2 cents factor. In a few years time we won’t even be thinking about it nor miss the 1 and 2 cents

      • Pedro
        April 22, 2015

        Hogwash! Do the math. Ok, I will do it for you. Here are prices before and after tax. The before taxes are rounded as you suggested. The output (after tax prices) still means the consumer pays more. For example at $29.96 you will pay the merchant $30.00.

        26.05 29.96
        74.8 0 86.02
        1.55 1.78
        2.75 3.16
        15.9 18.29
        33.1 38.07
        17.4 20.01

        This amounts to an additional tax to the customer. Look at it that way, if every time you shop you have to give your shopkeeper 5 cents in a jar for “efficiency” how would the average person struggling with bills feel? Yes for most people like you jam rock it may be just small change. But it is an additional tax for the poor, in the name of efficiency.

      • Zandoli
        April 23, 2015

        Pedro
        What about rounding to the NEAREST 5 cents don’t you understand. Therefore if the item is $29.96, the consumer pays $29.95 (not $30.00). Now you can go on from there.

    • George Fontaine
      April 22, 2015

      Pedro, you may lose 3 cents on that deal, but pay 50 cents to mint the coins because we all contribute…so do the maths!

    • The Facts
      April 22, 2015

      It was stated that you will pay only $44.00.
      It was also stated that it will only apply to cash.
      The financial institution where you bank will not short-change you. The exact amount of $967.04 will be deposited into your account. Withdrawing the full amount will be something else. In this case you should get $967.05. You stand to gain one cent.

  5. Zandoli
    April 22, 2015

    I don’t understand he angst this is causing. The 1 cent and 2 cent coins have no real value, so that should really not be a concern to anyone. It makes absolutely no sense to spend 6 cents (or whatever that figure is) to produce a 1 cent coin. I think the ECCB is correct in their decision to discontinue those two coins.

    • The Facts
      April 23, 2015

      The way it should be regarded, the loss of one cent and two cents for as much as a year of purchases add up to a lot. This is the manner in which they look at it.
      I do not bother about it. However, these two articles will cause me to keep a close tab on my purchases on how many cents I lose and how many cents I gain. The cash register indicates the rounded amount. It probably is easy for me to do so. The problem is, after the transaction for purchases, I soon forget about it.

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