Europe

Central Bank of Ireland recommends abolishing one and two cent coins

Euro coins Image copyright PA
Image caption The Central Bank of Ireland has recommended that 'rounding' of all cash transactions to the nearest five cents is rolled out nationwide

The Irish government is to discuss abolishing one cent and two cent coins.

This follows a trial in Wexford town in which cash transactions were rounded to the nearest five cents removing the need for smaller coins.

The Central Bank of Ireland has recommended rolling out the practice of 'rounding' nationally.

A report by the bank on the 2013 Wexford trial, showed strong support for 'rounding' from both consumers and retailers.

According to bank statistics, there were more than 2.4bn one cent and two cent coins produced in the Republic of Ireland by the end of October 2014.

The majority were one cent coins, which cost 1.7 cent each to produce, meaning that each coin is worth less than the amount spent making it.

Two cent coins also cost slightly more to make than they are worth.

Also, people's tendency to store the coins means the country's currency centre needs to produce more in order to maintain a supply, which adds cost to the state.

Inflated

The bank estimates that there are currently 35.3m euro (£25.5m) worth of one and two cent coins in the Republic of Ireland.

This is three times more than the average in other countries using the euro.

Five EU member states - the Netherlands, Sweden, Finland, Denmark and Hungary - have already adopted a rounding policy.

The Wexford trial showed that worries rounding would lead to inflated prices were unfounded.

In March, the Central Bank's Ronnie O'Toole said prices in Wexford did not go up as a result of the initiative.

"The way that rounding works is that all prices on the shelf remain the same, so if a bar of chocolate is 67 cents, it still is charged at 67 cents," Mr O'Toole said.

"When you get to the till and you've got a basket of items, it is only at that point do you round.

"When customers buy goods, it is only the total and final bill that will be rounded off to the nearest five cents.

"And it is only for cash transactions."

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