Use of coins disappearing fast in transactions

 Use of coins of 01, 02 and 05 taka denomination has gradually been disappearing in most transactions in the absence of proper policy and strategy in coin circulation in the market.
This has resulted in stockpiling of huge metal currency in vaults.
Analysts said availability of both coins and paper notes of these denominations of the currency has encouraged people to use notes rather than coins during transaction to avoid weight in purses or wallets.
Besides, they said there is absence of options like vending machines and buying electronic tickets for bus or trains where people are to be compelled to use coins helping circulation of lower denomination currencies in the market.
Sources said Bangladesh Bank's (BBs) vaults have been overflowing with coins of 01, 02 and 05 taka denominations as the central bank is bound to collect coins valued at Tk 1,000 from a person daily.
Against the collection, the BB is not able to circulate those in the market at the desired level.
Banking sources said except some departmental stores or shopping malls, banks cannot release the coins in the market. But many people, who save coins in coin boxes, force them to replace those with paper notes.
Experts said circulation of coins in the market is necessary to reduce dependence on paper notes whose printing is costlier than minting of coins.
Users allege that both retailers and shoppers refuse to accept coins from each other.  
Even rickshaw-pullers and petty shop owners become angry when more than one coin is offered to pay for service or for buying goods.
According to official data, there are 4.77 billion valued coins as per the central bank's record. But the concerned department refused to give monthly record of circulation of coins by different bank branches including those of Sonali Bank.
Sources, however, said a huge number of boxes with new coins remain idle in the central bank's vaults as those were never released to the money market since its minting three years ago.
Besides, the vault has coins of 01 paisa, 05 paisa, 10 paisa, 25 paisa and 50 paisa as there is no use of these coins in the market.
As the central bank's vaults are almost saturated with a huge quantity of coins, it has directed banks to accept coins according to limits fixed on the basis of sizes of branches.
The limit starts from Tk 5,000 to Tk 30,000 depending on branch sizes.
"Coins should be circulated in the market as these are not a thing to be kept in vaults. But we are collecting it due to lack of proper efforts," an official, however, said.
Dr Salehuddin Ahmed, former BB governor, said coins will always exist in an economy even after plastic money is popularised. He said coins are kept as a guarantor to paper notes.
"To ensure use of coins and proper circulation of those, issuance of notes of the same denomination must be controlled," he told the FE.
It is found that the central bank and the Ministry of Finance (MoF) blame each other for not facilitating supply of coins in the market.
The two authorities also accused each other of favouring syndicates engaged in printing notes and doing business based on coins and new notes in the market.
Though Bangladesh Bank is responsible for taking decisions on minting or printing of coins and other notes assessing GDP growth and inflation, a requisition is placed from the government to issue currency.
The central bank often cannot avoid pressure or influence of the MoF, said sources.
The MoF took a decision suddenly to release 05 taka note although coin of 05 taka denomination was available in the market.
According to a rough estimate, cost of coins is 05 to 10 paisa higher in minting than printing notes. But coins last 10 times higher than notes.
"Coins last at least for 40 years but notes depend on its use. Some times many notes turn unusable within a few months of printing," said the central bank official.
It is also learnt that as coins remain stockpiled years after years in vaults, many bags sealed with counted coins become worn out following pressure and moisture of heavy metals.
A senior official of the MoF told the FE many countries release both notes and coins in the market.
"There is no harm in circulating both kinds of currencies in the market," he said.
However, BB officials said except in some South Asian countries, there is no example of having currencies of same denomination in other countries of the world.
They also said India, Nepal and Bhutan have some currencies of same denomination but supply of notes is restricted.
Economists and analysts said reflection of non-use of coins has been found in the economy as cost of many services and goods rises. Rickshaw fares and prices of retail goods are now fixed in round figures.
Many unwanted situations occur as people cannot give coins of 01 and 02 taka denomination during any purchase like paying utility bills, fuel price etc. Trading of chocolate of 01 taka value also takes place during shopping.
Dr Salehuddin Ahmed laid importance on taking proper actions to encourage people as well as forcing outlets to use coins during any purchase citing examples of other countries.
He also suggested the central bank to introduce mobile courts in one or two places to create awareness among people that both retailers and shoppers are bound to exchange coins during any purchase.  
    smunima@yahoo.com