Retailers are in favour of phasing out the 1c and 2c coins, a move that could have a “negligible” impact on inflation.
The Malta Chamber of SMEs – GRTU, which represents the sector, is in favour of a system whereby the final total bill at the till, not the individual items, would be rounded up to the nearest 5c, meaning the most a customer would find added to his/her bill would be 4c.
“This means there would be negligible inflationary impact... many customers do not even want to receive the small coins as change,” the GRTU chief executive, Abigail Mamo, told the Times of Malta.
Only rounding up the final bill would mean the coins could be phased out without retailers having to re-label items and allowing them to offer competitive prices, especially in the price-sensitive world of groceries, she pointed out. Card transactions would, however, still charge the exact amount.
A spokesman for the European Central Bank said there were many ways to phase out the two small coins.
“Ceasing the issuance of 1c and 2c coins would not be likely to have a noticeable impact on inflation, provided that the rounding is done to total payments in cash and to the nearest 5c, as currently applied in some member states,” he noted.
Retailers are not the only ones who find the handling of the smaller denominations to be more trouble than they are worth, literally.
Malta Today reported in 2014 it costs 4.5c to mint a 1c coin and the European Commission reported that producing coins cost €1.4 billion more than their face value.
The brunt of the work if the two coins were to be dropped would fall on the banks, with the Malta Bankers’ Association noting that handling coins was a costly process, involving carriage, counting, packing, security and insurance.
In addition, there were also the costs incurred for the Eurosystem’s processes to ensure the coins in circulation are always fit for use.
The MBA has not taken an official stand on the use of 1c and 2c coins in Malta but said it was clear the costs to banks to handle such coins “outweighed the advantages (if any)” for customers.
It said the resultant cost savings would be beneficial for its members, although it expressed doubts on whether the long-term savings would be significant.
Could there be any losers?
The small denomination coins very often end up in charity collection canisters near the till. They are also very popular when collections are made among schoolchildren.
A spokesman for Bank of Valletta, which organises the annual Piggy Bank campaign in aid of L-Istrina, said the smaller coins amounted to quite a contribution.
“A very rough estimate is that €5,500 in 1c and 2c coins are packed and sent to the Central Bank from the campaign out of a total of €58,000. That’s almost 10 per cent of the total collection,” he said.
Change in the air?
• The 1c and 2c coins make up half of the 130 billion euro coins in circulation across the eurozone as at the beginning of this year. However, in terms of value, they only account for €900 million of the total coin value of €29 billion.
• Unlike banknotes, the issue of euro coins is a national competence, meaning it is in the hands of the Central Bank of Malta.
• When Malta adopted the euro in 2008, the Central Bank of Malta minted €23 million worth of coins, a stock which had increased to €84.4 million by the end of 2018.
• Five eurozone countries have already phased out 1c and 2c coins.These are: Finland (2002), the Netherlands (2004), Belgium (2014), Ireland (2015) and Italy (2018), although they are still legal tender.
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