According to the latest, spring 2022, edition of the "Payment Radar" of Latvijas Banka, the idea of withdrawal of small denomination (1 and 2 cent) coins from circulation has been supported by the majority of Latvia's population for the first time in the measurement history.
The "Payment Radar" contains the latest information on money usage habits of Latvia's households, businesses and the public at large. This information has also been obtained from the results of the population survey conducted by a market and social research agency SIA Latvijas Fakti.
The "Payment Radar" is published semi-annually and available on Latvijas Banka's website. Development of the proportion and interaction between non-cash and cash payments (as at February 2022) is the central measurement of the overview supplemented by more detailed numerical information and experts' commentaries.
February 2022 saw an increase in the share of non-cash payments and a decrease in the number of payments made by one inhabitant within a week compared with the measurement carried out at the end of summer 2021. The population has made on average 9.5 non-cash and 3.3 cash payments within a week (9.7 and 4.1 payments a week respectively in August 2021). Thus, the proportion of non-cash and cash payments is 74% to 26% (70% to 30% in August 2021) which is the highest share of non-cash payments attained ever before (by way of comparison: the proportion of non-cash and cash payments was 58% to 42% in February 2017).
The measurements of people's attitude towards small denomination euro coins have also reached historical levels. In February 2022, 51% of those surveyed expressed the view that 1 and 2 cent coins should be withdrawn from circulation, 43% said that they should remain in circulation, while 6% of the respondents were unable to form their opinion. In August 2021, the withdrawal of small denomination coins from circulation was supported by 43% of the population, 50% of the respondents pointed out that these coins should be retained in circulation, but 7% of those surveyed found it difficult to express their views.
Latvijas Banka would like to note that practical and tangible steps towards reducing the number of 1 and 2 coins in circulation have already been taken: 1) Latvijas Banka has not been minting 1 and 2 cent coins for several years now, and it obtains the amount necessary for circulation through exchanging other denomination coins with other euro area countries; 2) measures have been implemented within the cash cycle in cooperation with partners (banks and their agents, cash collection companies); 3) the population and public benefit organisations are welcome to the central bank to credit the amount equivalent to the value of coins to their bank accounts; 4) work on automation of the euro coin exchange is also underway.
The latest "Payment Radar" of spring 2022 shows that:
– the proportion of cash and non-cash payments executed by one inhabitant of Latvia constitutes 26% and 74% respectively (30% and 70% respectively in August 2021);
– the use and share of instant payments in interbank payments continue to follow an upward path. The volume and value of instant payments made in the second half of 2021 stood at 10.18 million and 4.04 billion euro respectively, reaching more than 104 thousand instant payments on certain days (the volume and value of instant payments executed in the first half of 2021 represented 8.0 million and 2.16 billion euro respectively, with approximately 76 thousand instant payments made on particular days);
– overall, 52.1 million payments worth 84.6 billion euro were executed in the instant payment service and the clearing service of the electronic clearing system (EKS) maintained by Latvijas Banka in the second half of 2021 (48.9 million payments worth 75.1 billion euro were made in the first half of 2021). The share of instant payments in the EKS payments executed between Latvian credit institutions climbed to 26.11% in the second half of 2021 (22.41% in the first half of 2021).
– the use of instant links also continues to grow, and the Proxy Registry "Instant Links" contained 609 thousand instant links in late 2021. 20.57 million requests for more user-friendly initiation of payments were made in the second half of 2021, reaching more than 150 thousand requests on certain days;
– the next step is the launching of the instant payment request service to make payments even more user friendly. Latvijas Banka has completed the development of the instant payment request service, which is now available to banks and other providers of such payment services for testing and offering to their customers. Instant payment requests will be applicable in virtually any field, particularly when making more user-friendly and safer (also faster) e-bill payments, likewise in e-commerce and other areas;
– public satisfaction with the availability of cash is growing further. In February 2022, 84% of Latvia's population (by 2 percentage points more than in August 2021 and by 6 percentage points more than a year ago) were satisfied with the opportunities to withdraw cash from their bank accounts. At the initiative of Latvijas Banka, an agreement on preserving access to cash across Latvia was reached with the leading representatives of the financial sector in 2021;
– the number of people who have heard about the potential introduction of the digital euro in the future has climbed (to 39%; 29% in August 2021);
– the number of those who have heard about cryptocurrencies is also following an upward path (89% in February 2022; 77% in August 2021). The number of people who have acquired or purchased cryptocurrencies has doubled (to 8% in February 2022; 4% six months ago). This points to growing risks associated with the use of cryptocurrencies. These risks are highlighted in the commentary by Emīls Dārziņš, Head of the Payment Systems Policy Division of the Payments Systems Department, Latvijas Banka (see below);
– new positive records have been hit in the field of cash security. The number of counterfeit euro banknotes and coins detected in circulation in the euro area overall was at the historically lowest level, i.e. 12 counterfeit euro banknotes per 1 million genuine notes in circulation (by way of comparison: there were 17 counterfeit banknotes per 1 million genuine notes in 2020, whereas in 2014, when Latvia joined the euro area – 48 counterfeit banknotes per 1 million genuine notes). The downward trend in the number of confirmed counterfeits has also been observed in Latvia. In 2021, 703 counterfeit banknotes and coins were detected in circulation, i.e. 25% less than in 2020, and the financial losses caused by counterfeits totalled 27 282 euro (12% less than in 2020).
Aigars Freimanis, Director of SIA Latvijas Fakti, Harijs Ozols, Head of Information Systems Department and ZibLab++ of Latvijas Banka, Ģirts Jansons, Deputy Head of the Cash Department of Latvijas Banka and Aleksandrs Antiņš, Head of the Cash Technology Division of the Cash Department of Latvijas Banka have also commented on the recent trends observed in development of the use of cashless money and cash.