That assurance from the Central Bank of Barbados this afternoon, as it rebuffed speculation that its decision to stop issuing any more one cent coins from May 7, was a precursor to devaluation of the dollar.
Advisor to the Governor, Celeste Wood, and bank secretary Elson Gaskin told a news conference at the Bank’s City headquarters that the institution was withdrawing all one cent coins from circulation because it had become unprofitable to continue producing them.
Wood, who is also head of the Currency Unit, said once the bank ceased issuing the coins, it would save $1 million a year and reduce the handling costs to financial institutions and retailers.
She noted, too, that the coins seemed to have lost their value for people, as they were simply throwing them away and there was now a greater demand for other denominations.
Wood said that while the withdrawal of the cents would not have any impact on payments made by cheque, debit and credit cards or electronic payments under a rounding off policy, there would be changes to cash transactions.
She explained that prices at the cashier would be rounded off to the nearest five cents – either up or down. For example, the bank advisor pointed out, if the total bill came to say, $36.01, it would be rounded off downward to $36.00, and if it was $36.03, that would be rounded upwards to $36.05.
Another example shows that a total bill of $50.06 would be rounded at $50.05 or $50.08, to $50.10.
“Only the total of all items would be rounded and not individual goods,” the bank official stated.
The customer or retailer, the Central Bank continued, would gain or lose a maximum of two cents per transaction.
The bank officials told reporters that even though the one cent would no longer be issued from May 7, it would remain legal tender indefinitely or until all coins were out of active circulation.
Wood expects there would be very few cents in active circulation within the next five years.
Rounding guidelines will be put in place for businesses to adhere to, and according to currency officer Sherri Bishop, a public education campaign will soon be launched on the withdrawal decision.
Close to 500 million one cent coins were put into circulation since being first issued in 1973; and since the bank launched its one cent drive in 2012, it has so far collected about 15 million.
The bank officials say the coins which are returned will be made into scrap.