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is substantial – 8 percentage points (51% of those surveyed have expressed the view that 1 and 2 cent coins should be withdrawn from circulation, but 43% – that they should remain in circulation; 6% of the respondents were not able to form their opinion).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

19.02.2025

Governor of Latvijas Banka proposes two Council Members for their re-election by the Saeima

Today, Mārtiņš Kazāks, Governor of Latvijas Banka, submitted a...
12.02.2025

Coin Programme for 2025

In 2025, Latvijas Banka intends to issue five collector coins, as well...
06.02.2025

The Saeima elects Mārtiņš Kazāks Governor of Latvijas Banka

Today, on 6 February 2025, the Saeima of the Republic of...
30.01.2025

Latvijas Banka invites borrowers to consider options of refinancing mortgage loans and avoiding overpayment

Amendments to a number of laws and regulations came into force in 2024...
23.01.2025

Working paper: Monetary Policy Transmission in the Euro Area: Is this Time Different? Chapter I: Lags and Strength

Working paper 1/2025
03.01.2025

Financial market supervision priorities: resilience, business model sustainability, and risk management

Over the next three years, the priorities for the supervision of the...
02.01.2025

Latvijas Banka now accepting applications for EU MiCA licence

As of 2 January, Latvijas Banka, the central bank of Latvia, is...
02.01.2025

Latvijas Banka is issuing an electronic money institution operating licence to SIA Paytegra

The Supervision Committee of Latvijas Banka has issued an electronic...
19.12.2024

The Saeima has appointed Māris Kālis as the acting Governor of Latvijas Banka until a new Governor is elected

Today, on 19 December, the Saeima failed to elect the Governor of...
13.12.2024

Macroeconomic forecasts | December 2024

Latvijas Banka has published its latest macroeconomic forecasts...
12.12.2024

Latvijas Banka is issuing "Cabbage", a collector coin layered with symbolism

On Monday, 16 December, Latvijas Banka will issue a silver...
03.12.2024

One Who Hesitates Is Lost: Monetary Policy Under Model Uncertainty and Model Misspecification

Working paper 7/2024