RIGA - The Bank of Latvia has drafted a law on rounding off the final amount of cash payments, which effectively would mean scrapping one- and two-cent coins, the central bank informed LETA.
Representatives of the central bank indicated that for several years there have been discussions in the Baltics, including Latvia, about the distribution of euro coin denominations and the need for small denomination coins - one and two cents. The Bank of Latvia has been discussing this issue with authorities and companies involved in money circulation since 2019.
The Bank of Latvia has drafted the law on rounding off cash payments, and discussions are under way with the Finance Ministry and the State Revenue Service on how the rounding of the final amount of cash purchases could be introduced in practice.
According to the central bank, the biggest challenge at the moment is adapting cash registers and cash systems. Traders would not only have to implement the changes to their systems, but also certify them in line with the current regulation. This would have a significant impact on costs and increase implementation time. "Currently, the Bank of Latvia, in cooperation with the Finance Ministry, is looking for the best solution to this problem," added the Bank of Latvia.
The central bank also said that scrapping the one- and two-cent coins would mean introducing a regulation that would round the final amount of the purchase rather than the price. For example, if the total amount of a purchase was EUR 12.23, paying cash at the counter would result in a final amount of EUR 12.25. However, if the total amount of the purchase was EUR 12.22, the buyer would pay EUR 12.2 at the checkout.
"Rounding the final amount of the purchase - and not the prices of individual goods - would not have an impact on inflation rates, as evidenced by the experience of countries that have already implemented this idea, including Ireland, Belgium, Finland and Italy," added the Bank of Latvia.
At the same time, the Bank of Latvia stressed that the scrapping of five-cent coins is not currently discussed in Latvia and is not planned until the public demands changes in the denomination structure of euro banknotes.
The Bank of Latvia also said that the central bank has been surveying public opinion on the issue for several years, concluding that public support for revising the denomination structure of euro coins has increased, including that this year more people would support giving up one- and two-cent coins compared to those who think they should be kept in circulation. The results of the survey will be published on Thursday, September 28, in the Payment Radar of the Bank of Latvia.
The Bank of Latvia also said that it is not only surveying the public opinion and discussing with the authorities concerned, but also taking practical steps to reduce the number of one- and two-cent coins in circulation. One of the measures to motivate people to reduce the stock of one- and two-cent coins is the possibility to exchange them free of charge at the central bank's cash desks.
According to the Bank of Latvia, 8.7 million or 37 tons of coins of various denominations have been exchanged at the Bank of Latvia since the beginning of this year, of which 11.3 tons were one- and two-cent coins.