In a context where more and more countries seek to modernize their payment systems and reduce the environmental impact associated with the use of cash, some currencies begin to lose space in the daily lives of citizens. Among them, those of 1 and 2 cents have been the target of debate in several European nations, with divided opinions on their usefulness and need for maintenance in circulation. But there is a European Union (EU) that will end the ‘black’ currencies.
The decision of Lithuania
Lithuania has decided to move forward with the gradual elimination of the ‘black’ coins of 1 and 2 cents from May. The measure was approved by the Lithuanian Parliament in March and is part of a wider plan to simplify cash payments and improve the efficiency of the monetary system.
In addition to the practical aspect, the objective is also reducing the environmental impact associated with the production and distribution of ‘black’ currencies, which in most cases end up accumulating in wallets or drawers, without returning to the market. The measure only focuses on cash transactions. In these cases, the total purchase will be rounded to the nearest 5 or 10 cents multiple to dispense with the use of smaller coins.
A problem that goes beyond the pocket
According to the Bank of Lithuania, it is estimated that, annually, about one third of one million euros in 1 and 2 cents are lost, out of circulation. These coins thus become economically useless and logistically expensive, it refers to.
At the same time, the Central Bank recognizes that, although their value is reduced, these coins are still necessary to exchange many points of sale. However, its maintenance represents a significant cost, both in financial and environmental terms. Authorities expect change to help rationalize the monetary system and make transactions more practical for traders and consumers.
The challenges of rounding
Rimantas Mažulis, responsible for the company Strong Point, which specializes in payment and management solutions, alerts to the challenges that the measure may bring in the short term. According to Mažulis, the application of rounding will not be simple in all contexts, especially when it comes to sales with discounts, promotions or payments in installments.
The complexity of the change will require adjustments in billing and payment registration systems, which may represent additional costs for traders.
Adjustments and expectations
Despite the initial challenges, Mažulis considers that the benefits of the measure will be evident in the medium and long term. Reducing the time required to make payments and lower ‘black’ currency dependence will bring operational advantages and greater simplicity in sales processes.
“Despite the initial challenges, the change will allow it to simplify payment processes and reduce the amount of small coins in circulation, which ultimately benefits both traders and consumers,” he says.
Changes should also be reflected in the accounting of companies, which will deal with fewer exchanges, simplifying the daily cashier.
A trend that spreads through Europe
Lithuania is not alone in this initiative. Seven eurozone countries have already made similar decisions, gradually eliminating the emission of ‘black’ currencies, specifically 1 and 2 cents and adopting rounding in cash transactions.
Among these countries are the Netherlands, Belgium, Finland, Ireland, Italy, Slovakia and Estonia. In these cases, the final value of cash purchases is automatically rounded, dispensing with the use of smaller coins.
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Widespread support but with exceptions
A recent survey by the European Commission has revealed that 61% of European Union citizens are in favor of eliminating 1 and 2 cents. This number reveals a growing trend to accept solutions that simplify payments. However, this acceptance is not uniform throughout Europe. In southern countries, resistance to measure is more pronounced, and the discussion is far from consensual.
The most reticent countries
In Spain, for example, only half of the population is favorable to the elimination of small currencies. Tradition and the habit of using daily transactions continue to weigh in public opinion.
In Greece and Cyprus, the opposition is even more significant. In these countries, most citizens do not agree with the removal of 1 and 2 cents, considering them still useful for exact payments. This division shows that the change, although desired by some, will have to be managed with clear sensitivity and communication.
Outside the eurozone: other experiences
Outside the single currency space, there are already several countries that have adopted the rounding system successfully. Sweden, Norway, Denmark, Canada and Australia are some examples of nations where the very small value coins have ceased to circulate. In these countries, cash transactions have been adjusted without major disturbances, proving that it is possible to adapt consumer habits and simplify the monetary system.
The Italian case
In Italy, the elimination of 1 and 2 cents began in 2018. Experience showed that the implementation of roundabout can be effective, but those responsible warn of the need for a broader European agreement.
The absence of a common policy can lead to confusion, especially with tourists, who, when traveling between countries with different practices, are faced with contradictory realities.
Way to the future?
The discussion about the usefulness of these coins is far from new. Many economists and bank entities have already argued that production costs exceed their real value, both in financial and environmental terms.
Copper coins require raw materials, energy and logistics to be placed in circulation, thus contributing to a significant ecological footprint. The elimination of these currencies may be more than one economic measure: it can also represent one step towards a more sustainable economy and adapted to new consumer realities.
An inevitable change?
With more and more transactions made by card or digital means, the use of physical money is decreasing in many countries. In this scenario, keeping coins of such low value may seem like an anachronism. Still, there are those who argue that the existence of small coins ensures accuracy in payments and avoids rounding that, on a large scale, can be unfavorable to consumers.
For now, Lithuania takes the next step. It remains to be seen whether the other European countries will follow the same path or continue to resist change. In any case, the discussion is launched and the future of centems will be undoubtedly one of the topics to follow in the coming years.
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