GEISHA KOW­LESSAR ALON­ZO

The phrase los­ing mon­ey to make mon­ey has tak­en on a lit­er­al mean­ing for the Cen­tral Bank, giv­en that every five-cent piece pro­duced re­sults in a net loss for the Trea­sury. High met­al prices and mint­ing fees have made the coin’s pro­duc­tion un­sus­tain­able.

By even­tu­al­ly de­com­mis­sion­ing this de­nom­i­na­tion, T&T could re­claim rough­ly $2.9 mil­lion each year, prov­ing that some­times the best way to grow the econ­o­my is to stop man­u­fac­tur­ing its least valu­able parts.

In an emailed re­sponse to queries from the Busi­ness Guardian, the Cen­tral Bank ex­plained every $0.05 coin costs $0.24 to pro­duce, near­ly five times the coin’s ac­tu­al face val­ue.

De­spite this widen­ing gap be­tween cost and val­ue, the $0.05 coin re­mains a sta­ple in lo­cal com­merce, with 29,013,968 coins cur­rent­ly cir­cu­lat­ing through­out the coun­try.

How­ev­er, the Cen­tral Bank con­firmed it is de­lib­er­at­ing on the con­tin­ued is­suance and pos­si­ble fu­ture de­mon­eti­sa­tion of the coin as part of its broad­er re­view of cur­ren­cy ef­fi­cien­cy.

While no fi­nal de­ci­sion has been made, the bank in­di­cat­ed that cost and us­age pat­terns are the pri­ma­ry fac­tors guid­ing its con­sid­er­a­tions, not­ing that the in­creas­ing cost of mint­ing coins is a grow­ing chal­lenge faced by many coun­tries, as raw ma­te­r­i­al prices and man­u­fac­tur­ing costs con­tin­ue to climb.

The cur­rent eval­u­a­tion of the five-cent piece fol­lows a his­tor­i­cal prece­dent set by the re­moval of even small­er de­nom­i­na­tions.

Lessons from the $0.01 coin

The po­ten­tial fate of the $0.05 coin draws com­par­isons with the coun­try’s ear­li­er de­ci­sion to re­move the $0.01 coin from cir­cu­la­tion. The Cen­tral Bank’s last or­der of $0.01 coins was placed in June 2016, cov­er­ing a three-year sup­ply of the de­nom­i­na­tion.

That or­der cost ap­prox­i­mate­ly TT$6.9 mil­lion to pro­duce.

How­ev­er, the to­tal face val­ue of the coins amount­ed to on­ly TT$375,000, il­lus­trat­ing the sharp im­bal­ance be­tween pro­duc­tion costs and ac­tu­al val­ue.

By the time the de­nom­i­na­tion was for­mal­ly de­mon­e­tised in 2018, the Cen­tral Bank es­ti­mat­ed that the de­ci­sion re­sult­ed in an­nu­al sav­ings of rough­ly TT$2.2 mil­lion.

The re­moval of the $0.01 coin al­so in­tro­duced a round­ing sys­tem for cash trans­ac­tions, al­low­ing prices to be round­ed to the near­est five cents when cus­tomers pay with phys­i­cal cur­ren­cy.

Elec­tron­ic pay­ments, how­ev­er, con­tin­ued to be processed to the ex­act cent val­ue.

The Cen­tral Bank said the ex­pe­ri­ence gained from that process pro­vid­ed a use­ful frame­work for any fu­ture changes in­volv­ing oth­er de­nom­i­na­tions.

No link to dig­i­tal cur­ren­cy push

The Cen­tral Bank al­so ad­dressed spec­u­la­tion about whether the po­ten­tial re­moval of the $0.05 coin could be part of a broad­er strat­e­gy to en­cour­age dig­i­tal pay­ments or ac­cel­er­ate adop­tion of the coun­try’s Cen­tral Bank Dig­i­tal Cur­ren­cy (CB­DC).

The bank made it clear that no such link ex­ists, main­taing that the de­lib­er­a­tions re­gard­ing the $0.05 coin are dri­ven pri­mar­i­ly by pro­duc­tion costs and us­age pat­terns, rather than ef­forts to pro­mote dig­i­tal trans­ac­tions.

“The cost of mint­ing the five-cent coin far out­weighs its face val­ue and its util­i­ty in every­day con­sumer trans­ac­tions,” the Bank ex­plained.

T&T launched its dig­i­tal cur­ren­cy pi­lot in 2021 through the “DCash” ini­tia­tive, be­com­ing one of the ear­ly adopters of CB­DC tech­nol­o­gy in the Caribbean. How­ev­er, the Cen­tral Bank said de­ci­sions about coin de­nom­i­na­tions are be­ing eval­u­at­ed in­de­pen­dent­ly of dig­i­tal cur­ren­cy ini­tia­tives.

Pub­lic en­gage­ment ex­pect­ed if de­ci­sion Is made

Al­though dis­cus­sions are on­go­ing in­ter­nal­ly, the Cen­tral Bank said no time­line has been es­tab­lished for a fi­nal de­ci­sion on whether the $0.05 coin will even­tu­al­ly be de­mon­e­tised.

Of­fi­cials al­so in­di­cat­ed that if such a move is pur­sued, the Bank would re­ly on lessons learned from the one-cent coin with­draw­al process.

“The bank has a mod­el that was suc­cess­ful­ly used when it stopped is­su­ing the $0.01 coin in 2017 and al­so has learn­ings from that ex­pe­ri­ence,” it said.

Those in­sights would in­form any sim­i­lar ex­er­cise in­volv­ing the $0.05 coin.

While the bank did not con­firm whether a for­mal pub­lic con­sul­ta­tion or reg­u­la­to­ry im­pact as­sess­ment would be con­duct­ed be­fore a fi­nal de­ci­sion is gazetted, it ac­knowl­edged that mem­bers of the pub­lic may have ques­tions about the pos­si­ble change.

These con­cerns, it as­sured, would be ad­dressed through of­fi­cial com­mu­ni­ca­tion chan­nels if a de­ci­sion is ul­ti­mate­ly tak­en.

Ques­tions were al­so raised about whether the $0.05 coin could re­ceive a spe­cial re­lease ahead of the new na­tion­al cur­ren­cy se­ries ex­pect­ed in Au­gust 2026, which would fea­ture the up­dat­ed na­tion­al Coat of Arms.

How­ev­er, the Cen­tral Bank dis­missed spec­u­la­tion about a com­mem­o­ra­tive ver­sion of the coin.

“There will be no ‘lim­it­ed edi­tion’ five-cent coin,” it stat­ed.

Round­ing rules to be in­tro­duced

If the $0.05 coin is even­tu­al­ly re­moved from cir­cu­la­tion, the Cen­tral Bank con­firmed that round­ing rules would again be re­quired for cash trans­ac­tions.

These rules would ap­ply on­ly to cash pur­chas­es, sim­i­lar to the sys­tem in­tro­duced when the $0.01 coin was with­drawn.

Un­der such a frame­work, pur­chase to­tals end­ing in cer­tain cent val­ues would be round­ed up or down to the near­est avail­able de­nom­i­na­tion.

“As with any de­mon­eti­sa­tion ex­er­cise, round­ing rules will be re­quired once a coin de­nom­i­na­tion ceas­es be­ing le­gal ten­der. These rules will stip­u­late the mech­a­nism for round­ing for cash pur­chas­es on­ly and will re­quire val­ues end­ing in cer­tain amounts to be round­ed ei­ther up or down to the next avail­able de­nom­i­na­tion,” the bank ex­plained. 

The bank has not yet in­di­cat­ed whether the coun­try would move to a $0.10 round­ing sys­tem or re­tain a struc­ture sim­i­lar to the cur­rent $0.05 round­ing sys­tem in­tro­duced in 2018.

For­mer fi­nance min­is­ter backs phas­ing out

In an as­sess­ment of T&T’s shift­ing eco­nom­ic land­scape, for­mer min­is­ter of fi­nance Sel­by Wil­son has sig­nalled that the death knell for low-val­ue coinage may be ring­ing, dri­ven by the sheer im­prac­ti­cal­i­ty of its cost ver­sus its dwin­dling util­i­ty.

Speak­ing on the mod­ern “cents” dilem­ma, Wil­son ar­gued that the Cen­tral Bank is jus­ti­fied in re-eval­u­at­ing the $0.05 coin—and po­ten­tial­ly high­er de­nom­i­na­tions—as the high price of mint­ing met­al in­creas­ing­ly out­weighs the val­ue of a cur­ren­cy that many cit­i­zens now sim­ply leave be­hind.

“Long time you see a $0.05 and you and pick it up. Now when you see a $0.05, you leave it there. Even $0.25 you see on the road you will not bend down to pick that up,” he said.

With in­fla­tion and the round­ing of prices at the gro­cery check­out al­ready ren­der­ing small change a rel­ic of the past, Wil­son’s per­spec­tive high­light­ed a prag­mat­ic tran­si­tion to­ward a lean­er, more dig­i­tal-fo­cused mon­e­tary sys­tem.

Draw­ing on his ex­ten­sive ex­pe­ri­ence work­ing along­side leg­endary Cen­tral Bank gov­er­nors such as William De­mas, Wil­son not­ed that the psy­cho­log­i­cal val­ue of small change has shift­ed dra­mat­i­cal­ly.

He point­ed out that while cit­i­zens might have once gone out of their way to col­lect small coins, the mod­ern con­sumer is in­creas­ing­ly like­ly to leave them be­hind, view­ing them as more of a bur­den than an as­set.

“And every­body now pays with a card. Even the cards are round­ed off to the near­est dol­lar. You hard­ly ever pay, hard­ly ever see cents on a bill any more,” Wil­son added.

Echo­ing that the eco­nom­ic ar­gu­ment for de­mon­eti­sa­tion rests heav­i­ly on the dis­par­i­ty be­tween a coin’s face val­ue and its man­u­fac­tur­ing cost, Wil­son said if it costs sig­nif­i­cant­ly more to pro­duce a $0.05 coin than the $0.05 it rep­re­sents, there is lit­tle jus­ti­fi­ca­tion for the state to con­tin­ue bear­ing that loss, es­pe­cial­ly if the coins are not cir­cu­lat­ing ef­fec­tive­ly.

He ex­pressed con­fi­dence in the Cen­tral Bank’s re­search, stat­ing that if they have de­ter­mined the coin is no longer vi­able, the tran­si­tion should be ac­cept­ed as a log­i­cal step in the na­tion’s fi­nan­cial mod­erni­sa­tion, as he al­so con­nect­ed this shift to the rapid rise of dig­i­tal pay­ments in the lo­cal econ­o­my.