Media practitioners on Montserrat joined their counterparts from around the ECCU region via Video Conference on Tuesday, April 21 2015 to discuss the phasing out of the 1c and 2c coins.
The meeting was facilitated by Mr Trevor Brathwaite, Deputy Governor of the Eastern Caribbean Central Bank (ECCB) and was broadcast from the ECCB Headquarters in St. Kitts to the eight ECCB member countries. Mrs Pamela Osborne, Director, Currency Management Department made the presentation and both Osborne and Brathwaite fielded questions from the media.
According to Mrs Osborne, effective July 1, 2015 the 1c and 2c coins will no longer be issued by Banks, however they will be legal tender for a period of at least five year; at the end of which time a decision will be made to determine whether more time is needed to completely phase out the coins. The decision to phase out the usage of the coins was made by the Monetary Council in February and is supported by research done in Canada. Other territories namely the Netherlands, Canada and Barbados have taken similar steps in 2004, 2013 and 2014 respectively.
She said that “it was noted that there was a disparity between the issue and redemption of the coins as they were not getting back into the system”. Since the inception of the ECCB in 1983 over 500M 1c coins and over 700M 2c coins had been minted, but only a fraction of those were in circulation. A study done by a Canadian financial institution has revealed that these coins were not very widely used and the same is true in the Caribbean.
In order to properly inform the public of the proposed withdrawal of the coins, a public relations campaign to include the printing of posters, the airing of a jingle, and a theme will be launched. Stakeholders to include Ministries of Finance, Commercial and other non-banks institutions, Chambers of Commerce, Business owners and Media are being informed ahead of the official launch in two weeks of critical information relating to the withdrawal. Cashiers will be trained in regards to the “Rounding System” to be instituted.
The high production cost of these coins (1c cost 6c and the 2c cost 8c to produce) compared to their low intrinsic value, the low redemption rate and the need to keep an adequate amount of cash in circulation have been given as reasons for the withdrawal. Counting, storing and transporting these coins which on their own have very little purchasing power, have also made this a necessary move and a cost effective move.
Also of interest from the ECCB is the announcement that the first coloured $1 coins will be introduced in October, 2015.