Economic expansion results in less coin usage

Charumini DE SILVA.

Coins in circulation have dropped with the expansion in economic activities compared to the use of notes in regular transactions.

Due to the expansion in the financial system, prices have increased correspondingly and people tend to use more notes instead of coins in their transactions. When prices increase, small-scale transactions in the market drop and as a result the use of coins is minimal, a senior official of the Central Bank told Daily News Business.

Although coins were used frequently in transactions, due to the expansion of economic activities more notes could be seen in today's transactions.

Another reason for less coin usage is that people complain that coins are heavier and they prefer notes instead of coins in their day-to-day economic activities. The reduction in the use of coins was because some people collected coins in tills for savings while others used coins when there was a shortage of cash, he said.

Despite the drop in the circulation of coins in the financial system the Central Bank issues coins and notes to meet the demand in the financial system, he said.

Since there is a belief among the public and certain sections of the trade that there was an infrequent use of coins in the country, Daily News Business interviewed bus conductors and small-tine traders for their views. Most of them said that at times when there was a shortage of coins they found it difficult to give the change to customers and passengers.

However, it is important for an economy to have its main transaction instruments to be in the circulation of the financial system, as the main financial instruments of trade or buying are notes, coins and cheques in people's day-to-day transactions, the official said.

 Highlights

* More notes seen in today's transactions

* Use of coins minimal

* Central Bank issues notes and coins to meet demand