Questions and answers
Common Questions and Answers
What do I do if I have any old coins?
The Reserve Bank will always pay face value for currency that has been legally issued for use in New Zealand. In order to obtain value, old coins should be returned to the Reserve Bank in Wellington.
We are aware that some trading banks have elected to no longer accept old coins and that old coins should now be returned to the following address:-
Reserve Bank of New Zealand
PO Box 2498
2 The Terrace
Wellington
New Zealand
Attn Mr D Blake
The Reserve Bank in Wellington will always redeem the face value of the old coins.
If you are bringing your coins to the Reserve Bank in Wellington, please print this form for returning demonetised currency to the Reserve Bank, complete it, and then return it with your old money to the Reserve Bank in Wellington.
How will rounding work?
The New Zealand Retailers Association has suggested to its members that when the total transaction value ends in x cents and payment is by cash then the following rounding principle should be applied:
Ending In: 1c/2c/3c/4c/5c - round down
6c/7c/8c/9c - round up
The Association has stressed that this is a suggestion only and each company will form its own commercial decision on the matter of rounding. However, the Association has added that where rounding is used then the policy should be clearly displayed at point of sale so consumers are appropriately informed.
How do blind and vision-impaired people distinguish the new coins?
Bank staff consulted the Royal New Zealand Foundation of the Blind and the Association of Blind Citizens of New Zealand. Representatives of both organisations expressed support for the new coins. They said that having plain edges on the 10 and 50 cent coins and the “Spanish flower” edging on the 20 cent coin gave the new coins “a whole new feel”. It could achieve the ideal outcome whereby vision-impaired people would not need to compare coins but would be able to identify any single coin by simply holding it.
Smaller, lighter coins
Why did the Reserve Bank decide to make the coins smaller?
By international standards, our old 20 and 50 cent coins were extremely large. The 50 cent coin, at 31.75mm in diameter and weighing 13.61gm, was one of the largest circulating coins in the world. It is, for example, 75 percent heavier than the Euro 50 cent coin. Their large sizes are a legacy of pre-decimal currency days. The 20 and 50 cent coins were left large to match the old half-crown and florin. At the time, people thought they would be accepted more easily.
Given their buying power nowadays, the 20 and 50 cent coins were inconvenient in people’s purses and pockets. Moving them in bulk is tiring for cash handling staff. Security companies said that smaller, lighter coins would bring significant benefits in terms of ease of handling and OSH issues. Smaller 20 and 50 cent coins will be easier to store and use.
In a survey commissioned by the Reserve Bank in 2004:
- 51 percent of respondents favoured smaller “silver” coins. When told that it would mean savings for the taxpayer, this figure went up to 66 percent.
- 28 percent opposed the proposal; and
- 6 percent had no opinion.
Six out of ten people said they store coins rather than using them because they are too bulky and heavy.
If you would like to read more about the survey, see the summary of reactions to proposed changes or the full report of reactions to proposed changes (PDF 879KB).
Why did the Bank “demonetise” the old coins?
It is important that the old coins be demonetised and withdrawn from circulation for several reasons:
- Banks, shops and other large cash-handlers would face considerable staff costs in handling and sorting two sets of coins on an indefinite basis.
- Many bulk coin handling and sorting machines would not be able to process an increased number of coin sizes. Coin weighing machines would be rendered ineffective.
- Businesses operating vending machines, including parking meters, would like to see a fast changeover so that they can quickly convert their machines to accept the new coins.
- Many of the public would probably find it confusing and annoying having coins of two different sizes for some denominations.
Demonetising is a normal procedure following a currency change. In the recent past, the Bank has demonetised one and two cent coins and one and two dollar notes.
Removing the 5 cent coin
Why did the Bank decide to withdraw the five cent coin?
The main reason is that over the years inflation has reduced the value of the 5 cent coin so much that it is now just a nuisance and of no real value in terms of people making transactions. A 5 cent coin is now worth less than half what a cent was worth back in 1967 when we switched to decimal currency. In addition, people use Eftpos more often than cash. Removing the 5 cent coin would only affect cash transactions and only the total when buying more than one item.
The Reserve Bank issues about 30 million 5 cent coins a year at a cost of just over $1 million. Yet they don’t circulate. Shops give them to the public as change, and then they are stored in jars at home, are lost, or are thrown away.
A survey commissioned by the Reserve Bank in early 2004 indicated that the public and retailers are of the same view. Of those surveyed:
- 68 percent of the general public favoured dropping the 5 cent coin;
- 28 percent favoured keeping it; and
- 4 percent were undecided.
The main reason cited for withdrawal was that the coin has no value and is a nuisance. Indeed, those surveyed had difficulty remembering what they do with 5 cent coins, saying they “just get lost”, or “just pile up”, or “sit in drawers”. A minority said that they throw them away.
Among small retailers:
- 70 percent were in favour of discarding the 5 cent coin; while
- 30 percent were against.
Among large retailers:
- 40 percent were in favour;
- 41 percent were neutral; and
- 19 percent opposed.
Those in favour said 5 cent coins are a hassle to deal with, and without them there would be less work and cost in sorting their takings. If you would like to read more about the survey, see the summary of reactions to proposed changes or the full report of reactions to proposed changes (PDF 879KB).
Will the withdrawal of the five cent coin cause prices to rise?
The Bank is confident that competition will restrain price increases. Some prices might rise, others fall, and others stay the same – as many do on a regular basis already. The overall impact on inflation is likely to be negligible. The Consumers Institute undertook a survey after the 1 and 2 cent coins were removed and found that prices actually fell slightly.
The AC Nielsen surveys of small and large retailers found that if the 5 cent coin was removed then, for prices ending in five cents, as many retailers would round down as would round up. Of course, rounding is only applied to the total value of all transactions – and only for cash transactions.
The increasing use of Eftpos makes the issue of rounding less important. Electronic transfers are used for 85 percent to 90 percent of transactions at some supermarkets. In 1987, by contrast, 60 percent to 70 percent of transactions were made in cash and the other 30 percent to 40 percent were made by cheque. Credit cards were not generally accepted then.
The Bank’s Economics Department has undertaken some analysis of the potential impact of the removal of the five cent coin. This work concluded that the effect on prices faced by most households would be negligible. Statistics New Zealand checked this analysis and confirmed that it was sound.
Why do other countries have very low denomination coins?
Countries with low value coins generally have state and local consumption taxes, which are added to the advertised prices of goods and services. Consequently, almost every cash transaction requires the exchange of very low denomination coins. In New Zealand, GST is almost always incorporated in the displayed price of products. Also, the use of electronic methods of making payments is more common in New Zealand than in most other countries.
Low denomination coins are unpopular in several developed countries. Major retail organisations, banks and consumer organisations in the Netherlands have voluntarily agreed that all pricing should be in 5 eurocent intervals. A recent survey in the United Kingdom indicated that about 5 million people there regularly throw away low value coins. If Europe and the UK opted for lowest value coins of 5 eurocents and five pennies respectively these would be of similar value to a New Zealand 10 cent coin.
Public consultation & Research
Estimating the number of coins
In order for the Bank to estimate how many coins they needed to mint and how many coins they were likely to recover, the Bank commissioned research in March 2006, to gauge how many coins members of the public had.
Participants in this research were asked to count the number of silver coins of each denomination they and all other household members have:
- For day to day use
- Stored in jars, money boxed or elsewhere:
In addition, participants were asked to estimate how many coins on average they put into storage each week and on average how often they empty out these stores of coins.
Based on this research it was estimated that:
- The number of coins in circulation for day to day use is approximately 48 million.
- The number of coins in storage containers of one sort or another is approximately 249 million.
If you would like more detailed information, please read the AC Nielsen report on the stores of coins. (PDF 176KB)
Public feedback on the proposals
On 11 November 2004, the Reserve Bank announced details of proposals to modernise New Zealand's `silver' coloured coins. The Bank sought feedback from the public on the proposals.
The Bank received 2,050 submissions. These comprised:
- 456 email messages;
- 124 individual letters;
- 186 submissions from school students (mainly from classes of primary school pupils); and
- 1,284 form letters (photocopied letters distributed by a third party).
Bank staff read and replied to all of them.
The main purpose of the Bank’s public consultations was to test its proposals through public scrutiny and to find out if any important issues had been overlooked. The Bank was pleased to find that no major surprises emerged from public submissions. Bank staff had already considered all serious suggestions made and were already aware of the main issues raised as concerns.
The Bank contracted AC Nielsen to analyse the feedback received from the public. If you would like more detailed information, please read the AC Nielsen summary of submissions from private individuals and the Proposed Changes to Silver Coinage – Analysis of Public Submissions (PDF 207KB) full report.
Reactions to proposed changes (2004)
In early 2004, the Bank commissioned a survey to gauge the level of community support to replace the silver coins with smaller, lighter coins and removing the 5 cent coin from circulation.
Proposal for Smaller, lighter coins
A survey of the community indicated that:
- 51 percent of respondents favoured smaller “silver” coins. When told that it would mean savings for the taxpayer, this figure went up to 66 percent.
- 28 percent opposed the proposal; and
- 6 percent had no opinion.
Six out of ten people said they store coins rather than using them because they are too bulky and heavy. If you would like more detailed information, please read the summary of reactions to proposed changes or the full report of reactions to proposed changes (PDF 879KB).
Proposal to remove the 5 cent coin
A survey of the community indicated that:
- 68 percent of the general public favoured dropping the 5 cent coin;
- 28 percent favoured keeping it; and
- 4 percent were undecided.
The main reason cited for withdrawal was that the coin has no value and is a nuisance. Indeed, those surveyed had difficulty remembering what they do with 5 cent coins, saying they “just get lost”, or “just pile up”, or “sit in drawers”. A minority said that they throw them away.
Among small retailers:
- 70 percent were in favour of discarding the 5 cent coin; while
- 30 percent were against.
Among large retailers:
- 40 percent were in favour;
- 41 percent were neutral; and
- 19 percent opposed.
Those in favour said 5 cent coins are a hassle to deal with, and without them, there would be less work and cost in sorting their takings.
If you would like to read more about the survey, see the summary of reactions to proposed changes or the full report of reactions to proposed changes (PDF 879KB).
Potential impact of the removal of the 5 cent coin.
The Bank's Economics Department has undertaken some analysis of the potential impact of the removal of the five cent coin. This work concluded that the effect on prices faced by most households would be negligible. Statistics New Zealand checked this analysis and confirmed that it was sound.
Other considerations
Why were the one and two dollar coins not changed?
The one and two dollar coins were not included in this review for several reasons.
- They are comparatively new coins, having been introduced in 1991.
- They are not overly large like the old 20 and 50 cent coins.
- They appear to circulate well rather than be hoarded or lost like the lower value coins.
- We would need to withdraw all the current one and two dollar coins if we introduced plated steel substitutes. This would impose large costs on operators of the many machines that only take one and two dollar coins.
- These coins are made from a copper-aluminium alloy that is not much more expensive than plated steel. As a result, there would not be substantial savings to be made from changing them.
Why did the Reserve Bank leave the designs unchanged?
The main goal of the project was to modernise New Zealand’s “silver” coloured coins so that they meet the needs of businesses and the general public more effectively. Leaving the designs unchanged makes the new coins readily identifiable and reduces transition costs.
Also, to have considered new designs would have generated considerable public debate and would have diverted resources from more important priorities. The Reserve Bank might review the images on the coins at some future date but this was not considered in the recent project.
Did the Reserve Bank consider introducing a 25 cent coin?
The suggestion of introducing a 25 cent coin has been considered on a number of occasions without a great deal of support. A 1987 Treasury report concluded that a 25 cent denomination is inappropriate in a basic 10 cent system. A public opinion survey in 1994 showed a mixed response but the majority of people were opposed.
In addition, the assumption that replacing the 50 and 20 cent coins with a 25 cent coin will reduce the number of coins in use is a fallacy. A 25 cent coin in conjunction with a 5 cent coin means extra coins are needed in change (e.g. five coins as against three for change of 90 cents). In 1994, the Association of Retail Grocers commented that their research had shown that introducing a 25 cent coin would increase the total amount of coinage required in each cash register by as much as 23 percent. At this stage the introduction of a 25 cent coin is not under consideration by the Bank.
Did the Reserve bank consider introducing a five dollar coin?
The suggestion of introducing a five dollar coin has been considered in the past. However, experience in New Zealand and overseas indicates that when a note and a coin of the same value circulate together then people show a strong preference for the note.
Notes have the additional advantage of being more secure. It is easier to build security features into them. Also, the use of polymer rather than paper for notes makes them more durable and cost effective. It is possible that one day we will introduce a five dollar coin but it is not being actively considered at the moment.
Did the Reserve Bank consider introducing irregular shaped coins to assist identification?
It is true that having one or more non-circular coins would assist in differentiation. However, it is very difficult for vending machines to handle coins with an irregular shape. Businesses and private individuals use vending machines for a wide variety of purposes, including the purchase of food and drink, parking and giving change. It is necessary to have circular coins to ensure the continued effective operation of these services.
Technical questions
Why are our new coins plated steel?
Our old “silver” coins are made of cupro-nickel (75 percent copper and 25 percent nickel). Nickel is expensive, and prices for these metals are volatile. For example, the price of copper has risen by 75 percent over the last twelve months. In recent years plated steel technology has matured, using either nickel to give a silver appearance, or copper to give a reddish appearance. Many countries now use plated steel coins, including the new euro 1, 2 and 5 cent coins, and coins issued in the UK, Canada and South Africa. Plated steel coins are more economical. Nickel-plated steel coins cost about 25 percent less than cupro-nickel coins of the same size. Copper-plated steel coins are about 33 percent cheaper than their cupro-nickel equivalents.
The plated steel coins look and feel much the same as the old coins, but they are lighter. They last almost as long as cupro-nickel coins. A bag of new coins weighs less than half that of the equivalent bag of old coins. In the year to 30 June 2004, it cost the Reserve Bank $3.5 million to issue 5, 10, 20 and 50 cent coins. Downsizing and changing to plated steel will save the taxpayer annually about $3 million.
How has this affected the coin vending industry?
Operators of coin counting, sorting and vending machines need to recalibrate their machines, buy replacement parts or replace their machines before 1 November 2006. Adjustments required will vary from a 15 second reprogramming job that would be done as part of regular maintenance for some modern machines to full replacement for some older machines.
The Reserve Bank has assisted those in coin-handling businesses by:
- providing sample coins for testing;
- distributing new coins where needed in New Zealand prior to the first issue day; and
- facilitating the return of old coins to main centres.
Please contact Don Oliver for more information.
What are the magnetic properties of the new coins?
All the metals used in the new coins are magnetic apart from the copper plating. The magnetic materials used are called "soft magnetic". This means they do not hold a magnetic field once a magnetising force has been removed. The new coins will not have any affect on credit card magnetic strips in people’s wallets. In technical terms, this gives them a very low "Remanence" and “Retentivity” figure with a very narrow "Hysteresis" loop.