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Speech by Yakiv Smolii, NBU Governor, at the presentation of new circulation coins of UAH 1, 2, 5 and 10 denomination

Dear journalists,

 

The National Bank of Ukraine is in charge of the domestic currency issuance and cash circulation management, as set forth by the Law of Ukraine On the National Bank of Ukraine. Part of this function is aimed at optimizing cash circulation to maximize utility and reduce public expenditures on its implementation.

 

Two important announcements will be made today.

 

The first decision concerns the new coins to be introduced into circulation in the short run.

 

Today, we are presenting new circulating coins of UAH 1, 2, 5 and 10 denomination.

The new coins will be introduced into circulation in a phased manner.

 

The first stage begins on 27 April 2018 when coins of UAH 1 and 2 denomination will be introduced into circulation.

 

During the second stage coins of UAH 5 and 10 denomination will be phased in, preliminary in 2019-2020 (the date to be specified).

 

These coins will in time replace the respective banknotes in circulation.

 

Ukrainian citizens will make payments with both new coins and banknotes of respective denomination 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 the banknotes of UAH 1, 2, 5 and 10 face value from circulation, but will cease printing these banknotes and to use such to additionally replenish circulation.

 

The replacement of banknotes of low denomination with the coins helps us align our practices with those in the European Union, where coins of EUR 1 and 2 denomination have been in circulation.

 

Similar undertakings were successfully implemented by Hungary, the Czech Republic, Denmark, Japan, Canada, the United Kingdom, Australia.

 

Replacing banknotes with coins will provide the best balance of quality and quantity of banknotes and coins in circulation thus satisfying the current needs of the government and the economy and conforming to the global practices.

 

Countries of the world have on average 12 denominations of the monetary unit. And we should strive to meet such criteria.

 

Such replacement can save the state over UAH 1 billion considering the lifespan of coins, since coin lifespan by far exceeds that of banknotes. Coins remain in circulation for about 20 years, when banknotes of UAH 1, 2, 5 and 10 denomination are in circulation only for a small period of time (on average, about one year).

 

This decision is also fostered by the advancement of cashless settlements, change in hryvnia purchasing power for the last 20 years and changes in consumer behavior. Cashless settlements result in the decrease of the number of denominations. In this regard, Ukraine is no exception. The share of cashless operations in Ukraine using payment cards more than tripled over the past five years, up to 39% at the beginning of 2018 (from 12% as of early 2013).

 

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Next important decision by the NBU

 

The second important NBU decision lies in the area of cash circulation optimization. The NBU took a decision on adopting the rounding rules for final amounts of purchase in cash settlements starting from 1 July 2018.

 

The NBU Board Resolution On Optimization of Circulation of Low Denomination Coins covers the respective rules.

 

It means the following.

 

1.    The NBU stops minting coins of 1, 2, 5 and 25 kopiika denomination. At the same time, coins of all these denominations will remain in circulation. However, the cash circulation will no longer be replenished with new coins of the said denominations.

 

2.    Coins of 1, 2, 5, and 25 kopiikas denomination will remain legal tender (Ukraine’s monetary unit is hryvnia, it will remain the equivalent of 100 kopiikas).

 

3.    For ease of calculations, the rounding rules will be introduced for the final amount of a purchase.

 

4.    Rounding rules will not be applied to cashless settlements.

 

5.    Ukrainians will be able to further use circulation coins of low denominations, while retailers will be able to set prices at a marketing level ending with 99 kopiikas.

 

The NBU has agreed the rounding rules with all public authorities. We have also discussed the rounding rules with banks, retailers, other business circles, they eagerly welcome the rules.

 

Our calculations show that the rounding rules will not change the prices and therefore implementation of this initiative will not lead to higher prices for goods and services. The rounding rules will have no impact on inflation whether directly or indirectly because the rules apply to the final amount in a receipt and not to prices for separate goods.

 

To sum up these two decisions, let me tell you that they will result in eliminating almost 47% of banknotes and coins from the total cash in circulation. It is over 8 billion coins of low denomination. At the same time, more than a billion banknotes will be replaced with coins.

 

Thus, the average number of coins per one Ukrainian will be halved, and the number of banknotes in circulation will decrease by 40%. This effect can be visible in two or three years.

 

This will make everyday use of cash easier for all Ukrainians and will stimulate cashless settlements one way or another.

 

Now, it is time to see the new circulation coins.

 

According to the procedure for classified information disclosure I have to open these four bags in turn and show you coins of each denomination.

 

Let me present you the new coins design.


 

 

 

 

 

 

 

 

 

 

 

 

 

Thank you for your attention.

 

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Last modification   14.03.2018