The Central Bank of The Bahamas (CBOB) officially announced yesterday that The Bahamas’ one cent coins as legal currency will be relegated to the annals of history.
Central Bank Governor John Rolle announced during a press conference at the central bank that by the end of 2020, the Bahamian penny will no longer be accepted at the register. By June of 2021, banks will no longer cash in pennies.
This change will have no effect on the overall cost of goods and services, Rolle said.
CBOB made the decision after studying the cost of producing the penny versus its actual value. The bank found that it cost $443,000 to distribute the one cent coin and it could save $7 million over ten years by eliminating the penny.
The central bank has already stopped manufacturing the penny. The last time pennies were manufactured was in 2015, Rolle said.
In January CBOB will stop issuing the coin to commercial banks and will begin withdrawing the coin from circulation.
“There are lots of reasons why this process is being embarked upon. The key one is that it is not financially or economically viable to produce the penny,” Rolle said.
“Today we are spending four percent above the face value to produce them. In the past we used to spend 50 percent above the value to get them produced.
“The penny is not widely used in cash transactions and as many as 60 percent that we have produced over the years we estimate are lost permanently.”
Rolle said the central bank will place coin counting machines in high traffic areas where people with pennies can redeem them for a token that can be deposited to their bank accounts.
The bank explained in a previous press release that the removal of the coin will not have an effect on electronic payments, while cash payments will be rounded off to the nearest five cents.
CBOB outlines its rounding rules as such:
• One and two would be rounded down to zero (e.g. $4.21 becomes $4.20).
• Three and four would be rounded up to five (e.g. $7.23 becomes $7.25).
• Six and seven would be rounded down to five (e.g. $15.67 becomes $15.65).
• Eight and nine would be rounded up to 10 (e.g. $27.89 becomes $27.90).
The bank explained that rounding off should only take place on the total bill and individual item prices should not be adjusted.
Rolle explained yesterday that U.S. pennies will also not be accepted at the register after 2020.
He said CBOB will likely recycle the pennies it recovers from the public.
Rolle said of the 700 million pennies that have been circulated since the start of the central bank, half of those can no longer be found.