Jamaica to drop ‘red money’ coins|
October 20, 2017
Citing diminishing purchasing power, the government of Jamaica began the process of demonetizing its lowest value circulation coins Sept. 14.
The Bank of Jamaica ACT or BOJ gives Jamaica’s central bank the power to recall and redeem any coins or bank notes at face value once three months’ notice has been published in the Gazette. At the end of that three-month period the bank can demonetize that currency. The Gazette is a public newspaper published at the Government Printing Office. For such changes to become law each must by published in the Gazette under the Jamaica Gazette Act.
According to the Sept. 14 Jamaica Observer newspaper, “Information Minister, Senator Ruel Reid explained at a post-Cabinet press briefing this morning that [the] Cabinet had approved the proposal to demonetize these coins because an efficiency assessment had determined that the cost of making these denominations consistently exceeded their face value.”
Reid added that the use of the 1-, 10- and 25-cent coins has been decreasing since 2005. These are the coins being phased out. The most current issue of Monetary Research Institute’s MRI Bankers Guide to Foreign Currency places Jamaica’s current exchange rate at $127.80 Jamaican to the U.S. dollar. In 2005 MRI published the exchange rate at $61 Jamaica to the U.S. dollar. The rate was published at $48.50 to the U.S. dollar in 2002.
People interviewed for a Sept. 14 The Star newspaper article wanted the $1 coin to be demonetized as well. A Kingston street vendor only identified as Monica is quoted as saying, “I don’t know how much dem value. Nobody take it from me, unless me go to the supermarket, and I hardly go to the supermarket, just the wholesales.”
Jamaica also uses $5, $10 and $20 coins as well as $50, $100, $500, $1,000 and $5,000 bank notes in circulation. The cent denominations are referred disparagingly as “red money.”
The Jamaican dollar has a history of being impacted by inflation. The Cayman Islands abandoned using the Jamaican currency system in favor of its own system in 1972. Three years later Jamaica began substituting an aluminum composition for bronze in its 1-cent denomination. The coin was changed from being round to 12-sided at that time.
At first coins systematically began replacing low denomination bank notes. In 1976 the 50-cent denomination became a coin, followed by the nickel-brass $1 replacing the $1 paper bank note in 1990. The 20- and 50-cent denominations were phased out a year earlier.
In 1991 nickel-plated steel replaced copper-nickel in the 5-, 10- and 25-cent coins. The $5 bank note was replaced with a nickel-plated steel coin in 1994. At the same time a smaller diameter nickel-plated steel $1 coin was introduced and the 5-cent coin was demonetized. Only one year later the diameter of the 10- and 25-cent coins was reduced.
Changes continued in 1999 when a nickel-plated steel $10 coin replaced its counterpart bank note. A ringed bimetal $20 coin displaced the bank note of that denomination in 2000.
Jamaica’s $100 bank note was first released in December 1986. In 1988 a $50 note was added to the mix, while in 1994 the $2 bank note was dropped, with the $500 added. The $1,000 followed in 2000, and the $5,000 in 2009.
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