Estonia is set to introduce new rounding rules next year, with the country also planning to cease minting 1 and 2 cent coins. As cash transactions will be rounded to the nearest 5 cents, the lowest denomination coins, although remaining legal tender, will essentially become obsolete as the practical need for them disappears.
As is the case in many countries, Eesti Pank documented a lack of recirculation for low denomination coinage, despite ordering truckloads of the 1 and 2 cents coins each year. Estonia is hardly the first country to introduce coin rounding, with the Falkland Islands and Lithuania also set to introduce the same rules next year.
The central bank launched a coin collection campaign last year, collecting over €1 million worth of coins in the first week via two coin collection machines situated in post offices. Collection volumes have since slowed, although Eesti Pank’s project partner, Omniva, noted that deposits varied widely, from 17 cent returns to customers exceeding the maximum daily allowance of three kilogram deposits.
Recycling the 1 and 2 cent coins would be expensive due to their plated nature, with metal separation likely to cost more than the value of coins, said Rait Roosve, Head of Eesti Pank’s Cash and Payment Systems Division.
Interestingly, Estonia was previously the only euro area country able to produce 1 cent coins below face value, ‘yielding a small theoretical profit’, noted Roosve. However, the overall costs of processing and transporting the coins still resulted in a loss, albeit one with a minor financial impact.
‘We’ll definitely find a use for the coins… as there’s still demand for these coins elsewhere’, Roosve continued. The central bank intends to send these coin surpluses, featuring Estonia’s national reverse design, to other European countries where there is still demand for them.
