Germany Moves to Phase Out 1 and 2 Cent Coins: How Cash Rounding Would Work.

New Initiative by the German Federal Bank

According to Novyny.live: To simplify everyday cash transactions for both consumers and businesses, the German Federal Bank has proposed legally mandating the rounding of cash payments to the nearest five cents. Under this plan, the total at the register would be automatically adjusted, eliminating the need for the smallest denomination coins.

How the Rounding Rules Would Apply

If the purchase amount ends in 1 or 2 cents, it would be rounded down; if it ends in 3 or 4 cents, it would be rounded up. Several European countries have already adopted this approach:

• Finland, which never minted small coins, has applied rounding since the euro’s introduction.
• The Netherlands
• Belgium
• Ireland
• Italy
• Slovakia
• Estonia

Germany aims to establish a legal framework for retiring 1 and 2 cent coins, though a specific timeline for implementation has not been announced. Burkhard Balz, a board member of the German Federal Bank, commented:

“Eliminating 1 and 2 cent coins will make cash more convenient for people and will make the cash cycle more reliable and efficient.” - Burkhard Balz

This proposed change could significantly alter Germany’s financial practices by streamlining daily cash payments. Similar systems in other European nations show that rounding can be an effective way to optimize cash handling. It also represents a potential step forward in modernizing Germany’s financial system to better meet current consumer needs.