Europe

The Irish town with no cents: Wexford hosts 1c and 2c coin trial

One and two cent Irish coins
Image caption The Irish Republic manufactures euro coins at its mint in County Dublin

An Irish town is set to lose all cents, and all two cents, in a coin experiment aimed at reducing the amount of small change circulating in the economy.

Wexford town has been chosen by the Irish Central Bank to host a trial to abolish one cent and two cent coins.

It means when customers buy goods, the bill - only the final bill - will be rounded off to the nearest five cents.

Ronnie O'Toole from the bank said they were keen to reduce use of the small coins, which are expensive to produce.

In fact, it is costing a mint just to keep up with the economy's requirements for one and two cent pieces.

The Irish Central Bank is hoping that by losing the cash, it can save money.

The problem, Mr O'Toole said, is that people tend to hoard the very small copper coins, instead of reusing them to pay for their shopping.

"We mint them, retailers give them to consumers and consumers put them in jam jars," he said.

"A one cent coin costs around 1.7 cent to mint, so it costs more to make than its face value. A two cent coin costs slightly more than two cents to make, so they're not cheap."

That might not seem like a lot of money at first, but at any one time there is an estimated 30m euros worth of one and two cent coins in circulation in the Republic of Ireland.

Because of jam jar hoarders, the Irish Central Bank has to replace about a tenth of the missing coins every year, leaving it facing an annual bill of hundreds of thousands of euros.

The coin experiment, known as a rounding trial, is due to begin in Wexford in the autumn and the bank hopes the majority of retailers in the area will sign up to take part.

But will consumers see it as a change for the better, or will they care tuppence about losing a cent here and there?

Last month, the Irish Republic officially fell back into recession and unemployment is running at 13.5%. Surely the fear is that such a move could result in prices being rounded up more often they are rounded down in their favour?

"The way that rounding works is that all prices on the shelf remain the same, so if there is a bar of chocolate and it is 67 cents, during the trial using rounding, it still is charged at 67 cents," Mr O'Toole added.

Image caption The coin experiment is to begin in Wexford in the autumn

"When you get to the till and you've got a basket of items and let's say the total bill is 25 euros and 21 cents, it is only at that point do you round."

The Wexford pilot is voluntary, meaning neither consumers or retailers will be forced to take part. Should they wish, shoppers can still demand 'exact change please' at the till and shop assistants will have to give them every cent they are owed.

Olympics

Mr O'Toole said Irish Central Bank staff will conduct separate surveys of prices, consumers and retailers before and after the trial, to ensure that the withdrawal of coins does not lead to inflated prices.

The coin trial was included in the Irish Central Bank's National Payments Plan, a "strategic roadmap for transforming payments in Ireland" which was published in April.

Mr O'Toole is the programme manager of the plan, and said it would be up to the Irish government to decide whether or not to roll out the Wexford experiment nationally, when the results of the bank's report were analysed.

If the government adopted the plan, the coins would go out of physical circulation in the Irish Republic, but would remain legal tender - so there is no immediate need to raid the jam jar.

The abolition of one and two cent coins from the euro currency would be a decision for Europe, not individual Eurozone members, Mr O'Toole said.

If the trial is rolled out, the Irish Republic would not be the first state to get rid of it small change.

In 1972, Sweden phased out its equivalent of the penny piece, and some years later it was followed by Australia, New Zealand, the Netherlands and Finland.

Canada is the latest country to do so, taking back its pennies in February this year.

But what happens to the coins when they are rendered defunct?

Australians melted down their obsolete one and two cent coins and turned them into bronze medals for the 2000 Sydney Olympics.

Canadian charities have launched penny drives.

Mr O'Toole said the plan for what is to become of Irish cents was "work for another day".

Unless of course Ireland gets to host the Olympics.

More on this story