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SMALLEST SLOVAK COINS MUST BE CAREFULLY RETIRED

Tonnes of money face destruction

SLOVAKS can no longer use 10- and 20-halier coins as legal tender after the country's central bank's decision that the almost 600 million coins in circulation bring more complications than benefit to businesses.
The National Bank of Slovakia (NBS) has removed the coins from circulation as of January 1, 2004, but commercial banks will continue accepting the haliers as client deposits until the end of the year.

SLOVAKS can no longer use 10- and 20-halier coins as legal tender after the country's central bank's decision that the almost 600 million coins in circulation bring more complications than benefit to businesses.

The National Bank of Slovakia (NBS) has removed the coins from circulation as of January 1, 2004, but commercial banks will continue accepting the haliers as client deposits until the end of the year.

The minting cost of a single 10-halier coin is 29 haliers (€.01), while its real value is 4 haliers. The annual cost of producing the haliers, including logistics and transportation, was at Sk17 million (€414,495), the NBS reported. Within five years the state could save up to Sk37 million (€902,137) by withdrawing the coins.

"The decommissioning will benefit all of society. The NBS has been trying to withdraw them for two years," NBS Governor Marián Jusko told a press conference in mid December.

By the end of 2003, the NBS registered 279 million 20-halier and 321 million 10-halier coins that make up the almost 600 million coins going out of circulation. Each person in Slovakia, excepting newborns, holds roughly 120 to 130 10- and 20-halier coins.

In payment for goods, prices will be rounded to 50 haliers or to whole crowns, the SITA news wire reported. One halier represents one hundredth of a Slovak crown.

The bank estimates that if it gathered just 50 percent of the coins it would see a pile of aluminium weighing 250-300 tonnes emerge. With the current stock of already withdrawn aluminium coins, one coin weighing less than a gram, the bank will have almost 500 tonnes of material.

"We have to destroy the coins so that they do not get back into circulation. However, we have not decided on the method of elimination yet," Ján Mathes, director of the NBS monetary division, told The Slovak Spectator.

The central bank does not have room to store such a pile, so the commercial banks will also help to amass the withdrawn coins. The NBS will call a tender, open for domestic and international firms, for the liquidation of the coins.

"The NBS would prefer that the firm that takes over the material, under strict security measures of course, destroy and also process the coins. That would be the ideal case. If it is not possible, then the tender will have to be cut into several stages," the NBS governor said.

According to the revised law on prices, haliers in payments will be rounded up if the figure is equal to or bigger than half of the value of the smallest coin, the 50-halier, and down if the figure is lower.

According to Finance Ministry spokesman Peter Papanek, only the sum of prices of all purchased goods will be rounded up or down, not each item separately.

Customers will pay, for example, Sk4.50 for an item that originally cost 4.30, and 4.00 for an item originally priced at Sk4.20. Similarly, Sk5.00 will be charged for an item that cost Sk4.80, and Sk4.50 for goods that cost Sk4.70.

Analysts fear that rounding the prices will be rather hectic. Adrian Ďurček, head of the retail chain Coop Jednota, told the daily SME that the process is complicated because the seller must pay value-added tax according to each item's price, not the final sum of a particular customer's purchase.

According to Ďurček, the price of each item should be rounded up or down.

Papanek said that the Finance Ministry has not dealt with changing the related legislation yet.

Fifty-halier coins are still legal tender and the NBS does not plan their withdrawal at this point.

"If we were to look at the function of haliers strictly from the point of view of profit, we would have to decommission these too. But we have made the compromise to keep them until the installation of the euro," Jusko said.

The production of all 600 million halier coins being decommissioned cost the state a total of Sk88 million (€2.15 million). The NBS will most probably not be able to collect them all.

However, the central bank does not expect any complications.

"It is not like withdrawing bank notes from circulation. We do not think that someone would try to steal a bag of halier coins or forge them," the NBS governor added.

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