74 million silver coins will be worthless
Newmarket Business Association
Sunday 29 October 2006
Report reveals 74 million silver coins will be worthless on Wednesday, costing retailers
An estimated 74 million silver coins worth over $11 million will be in people’s possession but not legal tender from midnight Tuesday 31 October, with retailers the main losers, reveals the country’s leading retailing district.
Two days before the old 50, 20, and 10 cent coins become worthless and the 5 cent is taken out of circulation all together, the Newmarket Business Association has shone light on a ACNielson report and research* commissioned by the Reserve Bank ahead of the coin changes.
“The research, which studied over 1,000 households late last year, makes some staggering revelations which the Reserve Bank should have considered much more carefully. For example under the old coin regime around 84 percent of the country’s silver coins were stored in ‘jars, money boxes or elsewhere’ with 63 percent of people not emptying out their stores for at least three months or longer. The transition period of just August, September and October was never going to be long enough to flush out enough of the old money,” says Cameron Brewer, head of the Newmarket Business Association.
“The report confirms that New Zealanders are hoarders. On average there were over a 185 coins in storage per household, with 45% five cent coins. However upon knowing all this, the Reserve Bank then instigated a short three-month transition period. It was too short of a window when research showed most people had over 80% of their silver coins stored away not to be retrieved for many months.
“The report states that the Reserve Bank accepted that a staggering 25% of the old coins would never be cashed in. According to their conservative estimations that’s 9 million 50 cent pieces, 16 million 20 cent pieces, 18 million 10 cent pieces, and 31 million 5 cent pieces totaling over $11 million. That’s a lot of money that will be worthless on Wednesday simply because the Reserve Bank hasn’t provided enough time for the old coins to move out of storage.
“What is annoying also is that if they’d lengthened out the transition period, the $11 million would have gone into the economy not into the rubbish bin. Most notably 50% of the respondents said they eventually spend their stored coins in shops! Everyone has been unnecessarily short-changed.”
Mr Brewer fears that retailers will be the ones to bare the criticism from Wednesday onwards when the old coins will not be accepted. “This whole bureaucratic exercise of downsizing our silver has been completely unnecessary with more angst on the way. Unfortunately it’s those behind the shop counter who will get the abuse when acceptable money today will not be acceptable on Wednesday,” said Cameron Brewer.
*ACNielson Stores Of Coins research, March 2006, Silver Coin Project (Commissioned by the RBNZ) – www.newcoins.govt.nz (Q&A/public consultation and research/pdf). . The Newmarket Business Association is Auckland’s second largest with over 1,500 commercial members.