After the seizure of some P50 million worth of bagged 1-piso coins in a Quezon City warehouse, the Bangko Sentral ng Pilipinas sounded a call for “the passage of a law on the hoarding of an extremely large volume of coins, as the central bank believes that the criminalization of this activity reinforces continuing efforts to maintain and protect the integrity of Philippine currency.” The BSP pointed out that coin hoarding prevents their primary use as a medium of exchange and it “hampers the efficient flow of transactions and causes an artificial shortage, which is disruptive to the financial system.” The BSP estimated previously that the average coin per capita is 180 pieces, way above the ASEAN standard of 50. Coins are widely used in sari-sari stores’ micro-retail sales. While beep cards are already being used to pay fare in the MRT systems, coins — also called “barya” in Filipino — are still used as fare in public transportation such as jeepneys, tricycles and buses.
In the absence of a law, the BSP has a Coin Recirculation Program to encourage the public to “refrain from unnecessarily accumulating coins, and instead use them to pay for goods and services or deposit them in banks.” Coins issued by the BSP since 2017 which together with Philippine peso banknotes constitute the New Generation Currency (NGC) Series include the following: 1-sentimo, 5-sentimo, 10-sentimo, 25-sentimo; 1-piso, 5-piso, 10-piso and 20-piso.
Clearly, coin hoarding is detrimental to the economy and needs to be penalized by law — but unfortunately, there is no law against it.
The House of Representatives had passed House Bill No. 4411 as early as in 2014; Senator Sergio Osmeña III filed Senate Bill No. 2452, or the proposed ‘Anti-Hoarding of Philippine Legal Tender Coins Act” and public hearings were held. Senator Manuel Lapid also filed a similar measure in 2012. No records are immediately available on further progress made by Congress toward passing a law.
Exempted are individuals who save coins in ‘piggy banks’ or ‘alkansya’, jars, drawers and wallets; small and medium enterprises engaged in retail businesses that use coins to operate, Automatic Tubig Machines, ‘Piso Nets’, vending machines, video karera machines and other kinds of amusement machines. Also not covered by the proposed law were the following: charitable institutions, private banks, banking and financial institutions of the government, and government agencies and instrumentalities which keep coins in connection with their business functions or official duties.
Targeted are “individuals or groups engaged in the large-scale hoarding and exportation of coins, which syndicates smelt and convert the coins for use as raw materials for mobile phones, computers or other industrial applications.”
According to the BSP, there is a “negative seigniorage”; seigniorage is “the profit made by a government from issuing currency, especially the difference between the face value of coins and the production cost.” For example, the cost of producing a 1-sentimo coin was once estimated at 1.12 centavos. Apparently, this cost differential is now being exploited by hoarders.
Clearly, there is a need for Congress to pass a law that will deter and thwart coin hoarders and profiteers.