Savenaca Narube: Launching Fiji's new coins
Address by Mr Savenaca Narube, Governor of the Reserve Bank of Fiji, at the official launch
of Fiji's new coin series, Suva, 11 December 2008.
* * *
Cabinet Ministers
Members of the Board of the Reserve Bank of Fiji
Distinguished Guests
Introduction
Let me add my warm welcome to you all and thank you for accepting our invitation to the
launch of our new coins. We believe that this is a noteworthy milestone in the history of our
nation and the Reserve Bank of Fiji.
As I will explain later, the change of coins is more complicated and difficult to do than
changing currency notes. The logistics and arrangements are very different. We have
changed our currency notes several times and will perhaps do so every ten years or so.
However changing coins is a rare thing to do.
We may be therefore witnessing a event. For some of us, we may never
"once in a life time"
experience it again. So, it is a very special occasion. We are therefore extremely glad that
you could join us in this celebration. Christmas is also around the corner so it is a good time
for celebration as well.
History
Coins date back to our earliest recorded history. Shells and even turtles were used for
trading in the very early years. As traders came to our islands, they brought with them foreign
coins. British, German, Mexican and even Russian coins co-circulated in Fiji for some time.
Fiji minted our first coins in 1934. Some of us may still remember the pennies and half
pennies with holes in the middle. They make very popular souvenirs now days. I am sure
many of us still remember the three pence and the shillings.
While we have changed our currency notes several times, it is almost 40 years since we
changed our coins and this was from the pennies and shillings to decimal currency on 13
January 1969.
In 1969 we had only 1 cent, 2 cents, 5 cents and the 20 cents. The 50 cents and the one
dollar were still in banknote or paper form. We converted the 50 cents note to coin in 1975
and the one dollar in 1995. These coins have remained basically the same as they were then
up until today.
As I said, we do not change coins as frequently as we change currency notes. There is one
good reason for this and that is coins do not get counterfeited as much as currency notes do.
Why? There are two obvious reasons. The first is that minting coins as you saw in the video
is a complicated and expansive process. Second, as you would imagine, the return from
counterfeiting coins are pretty small. But interestingly these have not stopped some from
setting up bogus minting presses in the past.
Why are we changing coins now?
You may ask: Why are we then changing our coins now? Let me explain:
•
Firstly, prices of base metals used in coin production have increased dramatically.
This increase has made central banks change the metal composition of coins. This
has significantly reduced the cost of minting them.
•
Secondly, technology has allowed innovative minting techniques to make more
efficient use of base metals. Again, this has reduced costs.
•
Thirdly, we can reduce the size of the coins. Many countries have done this. Smaller
and lighter coins are much cheaper to mint. Not only that, the handling costs are
also reduced.
So, we are changing our coins basically to reduce the cost of minting and handling. These
costs continue to increase as demand for cash continues to rise. The cashless society is yet
to fully eventuate and I think that it will not do so for some time yet.
Why are we dropping the one and two cent coins?
We have taken the opportunity to also review the structure of our coins. In doing so, we are
dropping the one and two cents. This is because of the following reasons:
• One, the value of lower denomination coins like the one and two cents have
dropped significantly. This is because of the increase in the prices of goods and
services. As a result, the one and two cent coins do not circulate well. People simply
leave them in jars, drawers and so forth. It therefore makes good sense to stop
minting them.
• Two, the cost of minting the lower denomination coins are more than their face
value. For instance, the cost of minting the one cent coin is four times its face value
even with cheaper metal composition. So, while these coins are lying idle in jars and
drawers, we spend a lot of money minting new ones. This is a clear waste of public
funds.
• Third, businesses and banks continue to incur higher cost in handling and
transporting fresh supplies of these coins year in and year out.
A significant change such as this always incites people's concerns. This is understandable.
So let me take this opportunity to answer some concerns on the cessation of the one and two
cents coins.
• Some say that it will be inflationary. I say that the experience in New Zealand and
around the world clearly shows that it is not.
• Others say that, it will not allow a continuous series of currencies. I say that this is
nice in theory. In reality, there is really no need whatsoever to have a continuous
series.
•
Lastly, others say that the gains from the multiplier effects of money will negate the
loss of minting these coins. I say that the gains will be much, much more if we do
not mint them. They do not circulate any way and there is no point in minting them in
the first place.
I strongly believe that the benefits of ceasing the one and two cent coins far outweigh the
cost of retaining them and the decision fully serves the interest of the nation.
Should we coin the two dollars?
On the other end of the coin scale, again because of the rise in prices, the lower
denominated currency notes are now being converted to coins, again as a move to cut costs.
The notes last for only about five years. Coins last much longer. For this precise reason we
had coined our fifty cents in 1975 and our one dollar note in 1995. In our public survey, we
asked the people if they wanted to also coin the two dollars as Australia and New Zealand
have done, but the answer was a clear no. Therefore, we have not coined the two dollars but
my guess is that it will be seriously considered sooner rather than later.
Learning from the rest of the world
I would like to say that we have benefited a lot from the experience of other countries notably
New Zealand who issued their new coins only two years ago. The Reserve Bank of New
Zealand had done a lot of work to evaluate various options on coins. They willingly shared
the results of their research with us. They also helped us by providing technical expertise.
I would therefore like to express our sincere appreciation and gratitude to the Reserve Bank
of New Zealand for their immense assistance and support. We are honoured today to have
the company of Mr. Brian Lang, former Head of Currency at Reserve Bank of New Zealand.
Mr. Lang visited Fiji in 2006 to help us during the technical evaluations.
Currency review
Today, we are launching Fiji's new coins which are smaller, thinner and lighter than the
existing ones.
This change has already commenced when we ceased issuing the one and two cents coins
to commercial banks from October 13 of this year.
Let me put this process in its bigger prospective. We decided back in 2002 to review our
entire currency - both notes and coins. We decided to work on the notes first and this
culminated last year when we issued the new currency banknotes including the One
Hundred Dollar note. I am glad to say that the new paper currency has been widely accepted
by the people of Fiji. The use of the one hundred dollar bill was much more rapid than the
fifty dollar bill when it was first introduced.
Today marks the completion of the whole currency review with the launch of the new series
of coins. The entire journey has taken us about 7 years. We are pleased with the results so
far. I am confident that the country will also accept the new coins that we are launching
today.
Unlike banknotes, changing our coins is a much more complex process. The logistical issues
are many. For instance, when we stop issuing the one and two cents, there was a rush to
return these coins to the commercial banks even though they are still legal tender. We have,
up to now, collected around 120 tons of one and two cents. This is a lot of weight to
transport. It also requires a lot of space to store 120 tons of coins. As we collect more old
coins, these logistics will intensify.
Cabinet approval
I wish to assure everyone that we have obtained the necessary approval under the law.
Under the Reserve Bank of Fiji Act, only the approval of the Minister for Finance is required
before we can change our currency either they be notes or coins. We have kept the Minister
and Cabinet fully informed of the progress throughout this currency review. We sought and
obtained Cabinet's approval of the new coins and the cessation of the one and two cents on
11 March 2008.
Minting
In March this year, the Board awarded the tender to the Royal Canadian Mint for the
production of a five year supply of our new coins. The contract is valued at approximately 7.8
million Fiji dollars (US $4.2 million). Royal Canadian Mint has minted Fiji coins in the past
and is recognised as one of the leading and innovative mints in the world. We are extremely
happy to continue this association with the Royal Canadian Mint.
How much will it save Fiji?
Our new coins will be on average nine (9) percent smaller, forty three (43) percent lighter,
and twenty one (21) percent thinner.
How much savings will we get from these changes in our coins?
If we were to produce the same quantity of our current coins, it would have cost us about
eight million Fiji dollars more. We save five million dollars by not minting the one and two
cents coins and a further three million dollars by reducing the size, weight and metallic
composition. These savings will also apply when we re-order these coins in future. Hence, if
we assume that we will not change these coins in another forty years, these savings can
amount to over 100 million dollars.
Savings in handling, transportation and storage
The benefits and savings do not end there. Due to the significant reduction in size and weight
of these new coins, individuals and businesses will save substantial costs in terms of
transportation, handling and storage.
Assistance for the visually impaired
Some have expressed concerns that the visually impaired will find it more difficult to
differentiate the value of the new coins. But, as we did in the new currency notes, we have
taken into account the needs of those of us that are visually impaired. For the first time, we
have introduced the varied edge designs. These will serve as an effective identification and
differentiating feature for the visually impaired as well as for the general public. Coins can
now be differentiated not only by size but also by their edgings. Different coins will have
different edgings. This will help greatly when the coins are about the same size. The five (5)
cents coin will now have a plain edge while the ten (10) cents will have the serrated or rough
edge. The twenty (20) cents being the closest in size to the ten (10) cents will have
intermitted serrations.
Designs
Let me turn briefly to the designs on the coins. When we changed our currency notes we
also changed their designs. However, for our new coins, we have retained the existing
designs both on the front and back. Why? We think the current designs are still relevant and
appropriate. They reflect directly on our culture and heritage. In addition, leaving the designs
unchanged makes the change to the new coins much easier. They make the new coins
easier to identify.
Multi-ply technology and metal composition
The metal composition of our coins is now different. Our new coins are manufactured by
Royal Canadian Mint in "multi-ply" layers. Multi-ply technology is patented by Royal
Canadian Mint and offers greater security, reliability and durability at reduced minting costs.
Multi-ply technology gives the coins unique electromagnetic signatures (EMS) which is how
modern coin vending machines are programmed to differentiate different denominations. The
technology enables coins of similar size and weight to have different electromagnetic
signatures which allows a vending machine to be programmed to accept one and not the
other. Simply put, you cannot put a foreign coin into our vending machines anymore. These
machines can be easily programmed to recognise and accept Fiji coins only. These would
give fewer headaches to city councils and vending machine operators let alone increase their
revenue take.
Are what we saying really work? Yes they do. We have already tested these coins in parking
meters and vending machines and we have not encountered any problem at all.
Durability
I mentioned that we have achieved all these improvements at lower cost without sacrificing
durability. Rigorous testing has shown that these coins are resistant to corrosion in tropical
country like ours and to household products. On average, these coins have a life span of
approximately 25 years. These test results have been corroborated by independent tests
conducted by the Reserve Bank of New Zealand during their evaluation.
Public awareness
Such a major change as this requires a comprehensive public awareness campaigns. We
have started this already. After the launch today, we are going all out to inform the public
about our new coins and what we are going to do in the next three months. The campaign
will commence with newspaper advertisements and supplements in December. Television
advertisements will start in January 2009. All these will be conducted in three languages. We
will also send teams to the rural areas to ensure the message filters down to all sections of
the community.
Issuance
What are our plans to implementing the change over to our new coins?
The new coins will be issued into circulation on 13 January 2009, the 40th anniversary of
decimal currency in Fiji. The new and old coins will co-circulate for about three months until
31 March 2009. This gives the Reserve Bank of Fiji time to work with the commercial banks
and the public on the logistics of extracting the old coins from circulation and replacing them
with the new. We have received excellent cooperation from the commercial banks during the
cessation exercise and we look forward to their continue cooperation.
When we changed currency notes last year, the old and the new notes circulated side by
side up to now. You may then ask: Why can we not do the same things for the new and old
coins? The answer is that the new coins are of very different dimensions and weight than the
old ones. If the old circulate with the new, this will create huge problems in identification,
counting, handling and to some a lesser extent coin machines. That is why we will only allow
a short time for the two sets of coins to circulate together before we withdraw the old ones.
Old coins
Our old coins, including the 1 and 2 cents coins will be officially demonetised on 31 March
2009 meaning they will cease to be a legal tender from 01 April 2009. From then onwards
you can only get value of these old coins from the Reserve Bank of Fiji. As we approach this
date, the public will be reminded through our public relations exercise.
What will we do with the old coins? We intend to sell them for their metallic content and we
have received several interests in this area.
Concluding remarks
I conclude by saying that I believe we have an excellent set of currency notes and coins
which can fully serve our needs well into the future. The new currency notes have been well
received. I am confident that new coins will also receive the same acceptance.
I now have much pleasure in officially launching the new coins.
I wish you all a Merry Christmas and a very Happy New Year.