More countries are halting production of low-denomination coins and slowly removing them from circulation. Nations like Canada, Australia and New Zealand have all made the move to eliminate pennies in recent years. While this move could alter how consumers use cash and change when making purchases, it doesn't eliminate the need for businesses and banks to have the most updated coin counting machine.
Trial necessary to see reaction
Ireland could be the next country to get rid of its low-denomination coins, according to recent reports. A push to stop circulating one- and two-cent coins has been gaining popularity and could soon have a significant impact on the nation's currency. The government has considered making the move in recent months, but it will first launch a trial to judge how consumers and retailers react to the move.
The Central Bank announced it will launch a test run in the town of Wexford, where merchants will be required to round purchases prices up or down to prevent the use of one- and two-cent coins. The move will apply to total purchases prices only, not the cost of each individual item bought within a single transaction.
While the trial period doesn't start until the fall, some are already predicting outrage over the move. The Irish Independent reported some retail managers are convinced shoppers will be displeased with the move, particularly as the economy is still struggling and people need to save all the money they can. Some are concerned that over time, retailers may stop rounding down and only round up, a problem that angered shoppers when Ireland made the switch to the euro.
Based on the success or failure of the trial, the Irish government will deem whether it is appropriate to officially eliminate pennies and two-cent coins.
Why Ireland is looking to make the switch
Many countries have eliminated low-denomination coins for the same reason - cost savings. In some instances, it can be more expensive to mint this change than the money is actually worth, which poses significant problems, especially for countries facing enormous national debts or budget crises.
As more nations look to cut spending or become more efficient, they may continue thinking up ways to reduce currency and coin production costs, although such movements have failed to gain much traction in the U.S. thus far.
July 25, 2013