National Cash Forum Advocates for Rounding Rule to Eliminate One and Two-Cent Coins

The National Cash Forum, initiated by the German Federal Bank, is advocating for a significant change in cash transactions by proposing a rounding rule aimed at phasing out one and two-cent coins in Germany. This initiative is backed by various stakeholders, including retailers, banking associations, cash transport services, and consumer advocates.

As cash payments increasingly become a topic of discussion in Europe, the forum suggests that transactions should be rounded to the nearest five cents. For instance, a purchase totaling EUR4.99 would be rounded up to EUR5.00, while a payment of EUR1.02 would be rounded down to EUR1.00. This proposal aims to streamline cash transactions and enhance user convenience.

In a statement released by the Federal Bank, it was highlighted that the Ministry of Finance is being urged to pursue legislative measures to enact this rounding rule in Germany. The aim is to standardize such rules across Europe to facilitate smoother transactions.

Burkhard Balz, a member of the Federal Bank's board, explained that the production, packaging, and transport costs associated with one and two-cent coins are disproportionately high compared to their value. He emphasized that removing these coins from circulation would not only make cash transactions more appealing but also contribute to a more sustainable and efficient cash economy.

The National Cash Forum, established in February 2024, is dedicated to ensuring cash remains a widely accepted method of payment in Germany. The forum's proposal aligns with practices already adopted in several European countries, where similar rounding rules are in effect.

Countries like Finland have implemented laws requiring cash payments to be rounded to the nearest five cents. For example, a payment of EUR14.97 would be adjusted to EUR14.95. Although one and two-cent coins are not actively circulated in Finland, they are still considered legal tender, and businesses may refuse to accept them if they provide prior notice.

Other European nations, including the Netherlands, Slovakia, Ireland, Italy, Belgium, and Estonia, have also adopted similar measures to facilitate cash transactions without the need for the smallest denominations.

Surveys indicate that one and two-cent coins are generally unpopular among the public. According to the latest Eurobarometer, conducted by the European Commission, a majority of respondents favor the abolition of these coins. Furthermore, a significant number of these small coins do not return to national central banks, often ending up in piggy banks or getting lost.

This proposed rounding rule represents a crucial step towards modernizing cash transactions and reflects a broader trend in Europe towards simplifying payment methods.