The Bank of Estonia has come up with a plan to reduce the use of 1 cent and 2 cent coins before eventually phasing them out.
The central bank floated a proposal at Wednesday's tax environment forum to discuss how to start rounding off cent values at vendors up and down to the nearest five cent in order to reduce the use of 1 cent and 2 cent coins in Estonia.
"On the average two truckloads of 1 cent and 2 cent coins exit the Bank of Estonia every year, which are handed as change to buyers in stores and are used very little after that. The proposal of the central bank is to discuss if there could be less of these cents in circulation which are very seldom used by the people," the central bank's vice president Madis Muller said.
Whereas it would continue to be possible to pay with 1 cent and 2 cent coins for purchases also in the future, such coins would no longer be handed back as change. According to the central bank, the end price would have to be rounded off only in the event of cash purchases, whereas with card payments the exact amount could continue to be charged.
For vendors coin rounding would mean having to update the software of cash registers once.
According to Nele Peil, manager of the Estonian Traders Association, coin rounding would be good for both vendors and consumers in the broader view, as clerks in stores would have to spend less time counting coins and businesses would have to spend less time on procedures related to cent coins.
Peil said that as things stand now, the lowest-value coins are mostly discarded later as many people find using them too troublesome.
According to fresh opinion surveys, more than half of Estonian residents are in favor of coin rounding. A poll of financial behavior taken in September 2017 indicates that 57 percent of Estonian residents are in favor of it, 33 percent do not support it and 10 percent are unable to say.
There is no unanimity in the eurozone when it comes to the use of coin rounding. The European Commission does not recommend applying the rounding-off rule when residents of the country do not support it. Five countries in the eurozone have switched to rounding off 1 cent and 2 cent coin values: Finland, the Netherlands, Belgium, Ireland, and Italy starting from this year. The experience of Finland, the Netherlands, Belgium and Ireland shows that prices did not rise when coin rounding was introduced. In all five countries supporters of rounding outnumber opponents now.
As the next step, the Bank of Estonia is about to gather feedback on the proposal from interest groups.