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Bill that sets new legal tender limits for coins passed in Parliament

SINGAPORE: The number of coins that a buyer can use in a single transaction will be streamlined and standardised to 20 coins per denomination after Parliament passed the Currency (Amendment) Bill on Monday (Jan 14).

This means a total of 100 coins across all five coin denominations capped for each payment, with the S$1 coin coming under the legal tender limit for the first time. 

The amended Bill will also have new rules to support the use of the Intelligent Banknote Neutralisation Systems (IBNS) here by omitting IBNS-damaged notes as legal tender, said Education Minister Ong Ye Kung as he presented the second reading of the Bill on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and minister-in-charge of the Monetary Authority of Singapore (MAS).


Mr Ong said legal tender limits, which refer to the maximum amounts for each coin denomination that can be used in a single payment, will minimise inconvenience to businesses and their customers.

With the revision, the limits have become “much simpler” compared to existing ones, which come in different amounts across the denominations.

For instance, five cent, 10 cent and 20 cent coins are now pegged to a limit of S$2 each, while 50 cent coins have a S$10 cap. There are no limits for payment using S$1 coins currently.

Such varying pegs can be confusing, according to Mr Ong. The use of a value limit is also less relevant given that the processing time and effort for coin payments depend more on the number of coins used, instead of the coins’ total value.

“For example, it does not make sense to set a value limit of S$2 for both 20 cent coins and 5 cent coins, which means that while a customer can use up to 40 5 cent coins, which adds up to S$2, he can only use ten 20 cent coins,” he explained.

Mr Ong, an MAS board member, also explained that the central bank’s move to include S$1 coins under the legal tender limits come on the back of two cases in 2014 where large quantities of coins were used for payment.

One involved the payment of nearly S$20,000 worth of coins at a car dealer’s showroom, while the other saw a mobile shop in Sim Lim Square issuing refunds of about S$1,000 in coins.

“Thereafter, MAS received public feedback on the need to place a legal tender limit on S$1 coins. MAS agreed that it was useful to do so.”


The other area of change includes amendments to section 23 of the Currency Act that will deem a note damaged by the IBNS as not legal tender, hence exempting providers of such a security system from the offence of mutilation of currency notes.

This is to support the Home Affairs Ministry’s plan to make the use of IBNS available to banks and other businesses in Singapore, said Mr Ong.

MHA is looking to license companies that sell IBNS or offer cash transportation services using IBNS as security service providers under the Private Security Industry Act (PSIA). It will obtain industry feedback to develop the licensing conditions.

Used in many European Union member countries, the IBNS is a security system installed in containers used for the transportation of currency notes. It deters robbery by permanently damaging or defacing the currency notes housed within it when its system detects an attempted attack.

Such a function comes with advantages, such as the possibility of replacing armed Auxiliary Police Officers during the transportation of cash. This can free up armed auxiliary police officers – a role that is seeing a manpower crunch – for more critical operations, according to Mr Ong.


Speaking in support of the amended Bill, Bishan-Toa Payoh GRC Member of Parliament Saktiandi Supaat echoed the manpower benefits of using IBNS for cash-in-transit (CIT) operations.

Asking about the number of banks here that have expressed interest, he wondered how authorities will reach out to those that have not and the cost incurred with the use of such security systems. 

Mr Ong replied that discussions are ongoing between MHA, MAS and the Association of Banks in Singapore.

But instead of being made compulsory, IBNS will serve as an “added option” when it comes to cash transportation services. “While banks are generally open to new technology, banks will need to assess together with their service operators the combination of technology and manpower that best fit their needs,” replied Mr Ong.

Other MPs who spoke also expressed support for the Bill, though they were concerned about how the revised legal tender limits for coins may impact certain segments of society.

Aljunied GRC MP Sylvia Lim, for instance, highlighted hawkers and buskers as groups that may be “adversely affected” given that coins make up a significant portion of their income.

Other small businesses, including newspaper vendors and provision shops, could also feel the heat, noted Mr Saktiandi.

“It is already a challenge for them to convert to cashless payments and I am concerned that these policies will indirectly lead to an overall reduction in coin usage and availability, which would affect their sales.”

Ms Lim added that the use of coin deposit machines at banks is not an option for people who do not have bank accounts, while Mr Saktiandi and Chua Chu Kang GRC MP Yee Chia Hsing took issue with the current charges for these machines.

Noting that there can be a “significant expense” when large amounts of coins are deposited, Mr Saktiandi wondered if the service charge imposed by banks, which is at S$0.015 for each coin deposited, can be capped and regulated.

Mr Chia said such a fee is unfavourable for small business owners, especially for those who are “forced to deposit” five-cent coins.

“Let’s face it, consumers do not like to get any change in five-cent coins and because consumers do not like receiving (them), retailers are forced to deposit them into banks but banks mpose a very high transaction cost,” he said, while asking if the MAS has considered removing the five-cent coin.

To these questions, Mr Ong said that while the MAS will “keep a close watch”, the setting of such service fees are commercial decisions taken on by the banks to offset costs incurred the handling of coins. 

Still, banks are expected to disclose their fees upfront for businesses and customers to make informed decisions.

On the elimination of five-cent coins, the minister said the central bank "will hesitate to remove five-cent coins because they are still worth something".

Citing the price tags for several basic necessities sold in supermarkets and convenience stores, he added that the removal of five-cent coins may increase the costs of such items as they may be rounded up to the nearest 10 cents.

As for the impact on certain segments within the society, Mr Ong said it would be unlikely given that the changes, such as an introduction of a cap for S$1 coin usage, will affect “very few” transactions.

“This Bill proposes a practical move towards a much simpler set of limits (that are) easier to remember (and) makes it easier for merchants to operate. It will not disadvantage consumers, except for extreme or even theoretical instances.”

Source: CNA/sk


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