Published: 31.03.2022

Ģirts Jansons, Deputy Head of the Cash Department, Latvijas Banka

The survey conducted in February 2022 by a market and social research agency SIA Latvijas Fakti shows that it is the first time the number of population supporting the withdrawal of 1 and 2 euro cent coins from circulation has exceeded that of people who want to continue using small change when making day-to-day payments. Moreover, the difference is substantial – 8 percentage points (51% of those surveyed have expressed the view that 1 and 2 cent coins should be withdrawn from circulation, but 43% – that they should remain in circulation; 6% of the respondents were not able to form their opinion).

The discussion on the future of the small denomination euro coins has been ongoing for some years now. It has been facilitated by:

  • experience of other countries limiting the use of 1 and 2 cents via sales rules (Finland, Ireland, the Netherlands, Belgium, Slovakia (to be introduced));
  • similar discussions in our neighbouring countries Estonia and Lithuania;
  • the pan-European initiative whereby the assessment of the usefulness of small denomination coins has been commenced;
  • the initiative My Voice; the society of Latvia has launched a debate on the future of these coins.

It should be borne in mind that the present-day challenges faced in the fields of sustainability and climate involve not only considerable resources necessary for minting 1 and 2 cent coins but also the additional effects on nature caused by transportation and handling of these coins. A large part of the above coins gets lost, leading to inefficient use of resources.

Just for information: even though Latvia introduced the euro already in 2014, 1 and 2 santim coins totalling approximately 4.7 million euro have not been exchanged at Latvijas Banka yet. People have irretrievably lost this money, which in turn pollutes nature. It is highly likely that these coins will never be exchanged to euro. 1 and 2 euro coins follow a similar pattern, i.e. only around 10% of these coins return to Latvijas Banka. Imants Ziedonis said that there is no great happiness, there are only bits and pieces of happiness. The situation with climate challenges is similar, i.e. the overall impact on nature is composed of a mixture of many different seemingly small factors, but their combination has a significant effect. The withdrawal of 1 and 2 cent coins opens a small but vital window of opportunity for the public to lead a more nature-friendly life.

This turning point in public mood was no surprise to Latvijas Banka. We have taken the first practical and tangible steps towards reducing the number of 1 and 2 cent coins in circulation.

First, in the cash cycle, cooperation with our partners (banks and their agents, cash collection companies) aims at minimising, as far as possible, the amount of small change in circulation.

Second, we encourage people to take their piggy banks to Latvijas Banka and credit the amount equivalent to the value of coins to their bank accounts (for exchange conditions). Public benefit organisations are particularly invited to do so. They can exchange an unlimited number of coins following registration at Latvijas Banka.

Third, the near future will see the modernisation of the euro coin exchange process, which will involve automation of the Cashier's Office of Latvijas Banka and will allow people to exchange coins via automated machines.

To save resources and optimise the provision of euro coins, Latvijas Banka has not been minting 1 and 2 cent coins for several years now; instead it obtains the amount necessary for circulation by exchanging other denomination coins in other euro area countries that have already withdrawn 1 and 2 cent coins from circulation.

These measures are far from being the only ones aimed at reducing the number of 1 and 2 cent coins in circulation. The idea of rounding the total amount of purchases when paying cash remains vital. This would not mean that shops increase prices by rounding them to the closest multiple of five. The total amount of the purchase would be rounded, i.e. if it ends in 1, 2, 6 or 7, it would be rounded down, whereas a sum ending in 3, 4, 8 or 9 would be rounded up.

With public support following an upward path, we hope that it will not escape the notice of traders. Our ability to follow suit of other euro area countries by introducing rounding of the total amount of purchase and thus saving public resources and respecting nature depends on traders' position most directly.

Latvijas Banka is ready to sit down at the negotiating table to discuss further steps, but in the meantime we will continue looking after the public good, i.e. we will not waste resources on minting new coins, but will facilitate their return to Latvijas Banka.

Latest News

10.06.2024

Macroeconomic forecasts | June 2024

Latvijas Banka has published its latest macroeconomic forecasts...
04.06.2024

Understanding How Job Retention Schemes Reshape the Within-Occupation Skill Profile of Employees within Firms

Working paper 2/2024
03.06.2024

Green arguments to be revealed during the debate on sustainable finance

On 10 June at 17.00, the Stockholm School of Economics in Riga...
31.05.2024

Latvijas Banka issues an electronic money institution operating licence to SIA TigSiPay

On 29 May, the Supervision Committee of Latvijas Banka decided to...
16.05.2024

AS INDEXO Banka receives a licence for the operation of a credit institution

Following the assessment and proposal by Latvijas Banka as the...
14.05.2024

Students are invited to submit their papers for the Competition of Student Scientific Research Papers

As of today, the students of higher education institutions established...
02.05.2024

Latvijas Banka has developed guidelines for more effective management of sanctions risk

Latvijas Banka has developed the "Guidelines for establishing and...
24.04.2024

On the performance of Latvijas Banka in 2023

The Council of Latvijas Banka has approved the Annual Report of...
18.04.2024

Supervision experts refine their expertise in financial crime risks within the realm of crypto-asset services

On 17 and 18 April, 30 supervision experts, auditors, as...
18.04.2024

Latvia's Coin of the Year 2023 – Stardust

The annual survey results have revealed that Latvia's Coin of the...
10.04.2024

Latvijas Banka issues a collector coin "Across the Times"

On Tuesday, 16 April, Latvijas Banka is releasing a collector...
05.04.2024

Latvijas Banka imposes a fine on the former officials of Baltic International Bank SE

The Supervision Committee of Latvijas Banka decided to impose a fine...