Lithuania Votes for Cash Rounding to Phase Out 1 and 2-Cent Coins by May 2025

On a pivotal Thursday, the Lithuanian parliament made a decisive move towards simplifying cash transactions, voting in favor of rounding final sums to the nearest multiple of five cents for cash payments, starting May 2025. This legislative step aims to diminish the circulation of 1 and 2-cent coins, marking a significant shift in the country’s currency handling. The law garnered 65 votes in favor, with 20 against and 31 abstentions, showcasing a mix of support and opposition within the legislative body.

Economic Efficiency and Environmental Considerations

Conservative MP Mindaugas Lingė, at the forefront of the proposal, emphasized the mutual benefits for both consumers and retailers. The rounding mechanism is expected to streamline transactions, reducing the need for small-denomination coins that often end up unused. On the contrary, opposition MP Tomas Tomilinas voiced concerns over the potential for adverse effects on individuals who meticulously manage their finances, fearing an inflationary impulse triggered by the rounding up of prices.

Implementation and International Context

The specifics of the rounding rule mandate that from May 2025, cash payments will be adjusted up or down to the nearest five cents, depending on the final sum. This means a purchase totaling 12 cents will cost 10 cents, while one amounting to 13 cents will be rounded to 15 cents. Noteworthy is the fact that 1 and 2-cent coins will remain legal tender, accepted for payments, thereby offering a gradual transition away from their use. Lithuania joins a cohort of six EU countries already employing similar cash rounding rules, with Estonia set to follow suit in 2025.

Source: BNN