The National Bank of Ukraine in line with the policy on optimization of cash circulation in Ukraine has presented new circulating coins of UAH 1, 2, 5 and 10 denomination.
These coins will in time replace the respective banknotes in circulation.
New circulating coins will be introduced step-by-step:
First step – on 27 April 2018 coins of UAH 1 and 2 denomination will be introduced into circulation.
Second step will be implemented later, UAH 5 and 10 coins will be introduced in 2019-2020 (the NBU will name the specific date later on).
Ukrainian citizens will make payments with both new coins and banknotes of respective denominations for an unlimited period, until the coins gradually replace the banknotes in circulation. Thus, paper money of UAH 1, 2, 5 and 10 denomination will be in circulation along with the coins until the last paper hryvnia.
The NBU will not remove UAH 1, 2, 5 and 10 banknotes from circulation, but will cease printing these banknotes and use such to additionally replenish cash in circulation.
Detailed description of the new circulating coins of Ukraine
Reasoning and Advantages
“The National Bank of Ukraine carries out the function of issuing domestic currency and managing cash circulation as set forth by the Law of Ukraine On the National Bank of Ukraine. This role includes optimizing cash circulation to improve usability and decrease respective public expenses”, noted the Acting Governor of the National Bank of Ukraine Yakiv Smolii.
He explained that replacing banknotes with coins will provide the best balance of quality and quantity of banknotes and coins in circulation thus corresponding the current needs of the government and the economy, as well as global practices: “International practices show that an average number of denominations of currency is 12. And we should aim for this number also”.
Yakiv Smolii noted that such replacement could save the state over UAH 1 billion considering the lifespan of coins. Since coins’ lifespan by far exceeds that of banknotes. Coins remain in circulation for about 20 years, when UAH 1, 2, 5 and 10 banknotes are in circulation only for a small period of time (on average, about one year).
“This decision is also fostered by advancement of cashless settlements, change in hryvnia purchasing power over the last 20 years and changes in consumer behavior. Increasing cashless settlements reduces the number of currency denominations in foreign countries. Ukraine is no exception. The share of cashless operations in Ukraine using payment cards for the last five years more than tripled i.e. up to 39% at the beginning of 2018 (from 12% as of the beginning of 2013)”, noted Smolii.
In practice, such replacement will be gradual, thus consumers will not be inconvenienced. In general, the NBU annually withdraws from circulation about 800 million of worn-out banknotes of all denominations. The banknotes of lower denominations of 1 through 10 hryvnia account for almost a half (over 40%).
Furthermore, the replacement of banknotes of low denomination with the coins will harmonize Ukrainian practices with those of the European Union having EUR 1 and 2 circulating coins.
Similar undertakings were successfully implemented by Hungary, the Czech Republic, Denmark, Japan, Canada, the United Kingdom, Australia.
Technical Specifications and Design of New Coins
Director of the NBU Cash Circulation Department Viktor Zaivenko informed all present on the technical specifications and the design of new circulating coins.
“New circulating coins will be of silver color, small size, light-weight and convenient for payments”, he noted. “When developing design we chose to be consistent and keep renowned Ukrainians portrayed on respective banknotes. The reverse of UAH 1 coin depicts the Grand Duke of Kyiv, Volodymyr the Great; of UAH 2 – the Grand Duke of Kyiv, Yaroslav the Wise; of UAH 5 – Hetman Bohdan Khmelnytskyi; of UAH 10 – Hetman Ivan Mazepa.”
The obverse of all coins will portray the Ukraine’s small coat of arms (the trident), denomination, name of the issuing country (Ukraine) framed by an ancient Rus ornament.
Viktor Zaivenko added that the color and the size of new coins would make them easily distinguishable from other denominations so that the general public has no difficulty in recognizing the coins.
He also noted that security features of the coins intended for visual and sensory control of authenticity include the design of the obverse and the reverse, the edge (respective grooving) and fine elements of the images that cannot be duplicated under improvised conditions.
During automated processing of coins using special equipment for coin authentication the following technical specifications are applied as size and weight, as well as spectral signature i.e. a material-specific emittance.
Detailed information on the security features of circulating coins will be posted on the NBU’s website on 26 March this year.
Optimization of Circulation of Low-Denomination Coins
During the presentation of the circulating coins the Acting Governor of the National Bank of Ukraine Yakiv Smolii also announced that in line with the policy on optimization of cash circulation starting from 1 July 2018 the rounding rules for final amounts of purchases in cash will be introduced in Ukraine.
The NBU Board Resolution On Optimization of Circulation of Low-Denomination Coins covers the respective provisions as follows:
- The NBU will cease minting coins of 1, 2, 5 and 25 kopiikas. At the same time, coins of all said denominations will remain in circulation. However, cash circulation will no longer be replenished with new coins of the said denominations.
- Coins of 1, 2, 5, and 25 kopiikas will retain the function of the medium of exchange (Ukraine’s monetary unit will remain being the equivalent of 100 kopiikas).
- In order to simplify calculations, the rounding rules will be introduced for the final amount of a purchase:
- if the last digits of the amount are from 1 to 4 kopiikas, it will be rounded down to the nearest tenth of kopiikas;
- if the last digits of the amount are from 5 to 9 kopiikas, it will be rounded up to the nearest tenth of kopiikas;
- If the customer has low-denomination coins he/she can continue to use such for payments, and if the seller is in possession of such coins, he/she can give change with coins of respective denominations.
- The rounding rules will not be applied to cashless settlements.
- Ukrainians will continue to use coins of low denominations, while retailers will be able to set sale prices ending with 99 kopiikas.
Application of the NBU rounding rules was agreed with all state authorities. Discussions were also held with banks, retailers, other business circles, that were positive about the rounding rules.
The rounding rules will not effect prices and therefore implementation of this initiative will not lead to higher prices of goods and services. Introducing the rounding rules will have no impact on inflation either directly or indirectly because the rules apply to the final amount in a receipt and not to prices of certain goods.
To summarize the effect of the NBU decisions, Acting Governor of the National Bank of Ukraine Yakiv Smolii noted, “If we extrapolate these decisions to the current structure of the currency in circulation, almost 60% of coins will be removed from circulation accounting for about eight billion of low-denomination coins. At the same time, more than a billion banknotes will be replaced with coins. Hence, the average number of coins per one Ukrainian will be halved, and the number of banknotes in circulation will decrease by 40%. We will observe this effect already in two or three years.”
Yakiv Smolii highlighted that these NBU decisions are intended to improve usability and simplify everyday use of cash for Ukrainians, as well as foster cashless operations in the country.
Source : bank.gov.ua