One- and two-euro cent coins have the worst impact on the environment, as people often use them only once. Almost half (49%) of Latvian residents support their exclusion from circulation. The impact of banknotes on the environment is relatively small and is gradually decreasing, and more and more people are switching to digital forms of payment.
Eight kilometers
The long life of banknotes and their use for many payments means that the production of banknotes has a lower impact than their transport and distribution. For example, according to the European Central Bank’s Product Environmental Footprint (PEF) study, one person using euro banknotes for one year has an impact equivalent to an 8 kilometer car journey.
The study assesses the potential environmental impact of all euro banknote life cycle activities – from the purchase of raw materials, production, distribution and circulation to destruction by the national central banks of the eurozone countries.
The largest part of the environmental footprint of euro banknotes is the energy consumption of ATMs (37%) and transport (35%). Processing in banks (10%), such as money packaging, paper production (9%) and banknote authentication in shops (5%) are less impressed.
Comparison of the environmental footprint of euro banknotes and other distributed products*
- The average annual impact of euro payments per euro area resident in 2019 was 101 µPt (micropoints), which is equivalent to a car journey of 8 km.
- The environmental impact of a European Union resident in 2019 was 1,003,686 µPt, which is comparable to two trips around the world, totaling 79,575 km.
- 3429 µPt is the environmental impact equivalent to consuming 71 bottles of water (1.5 L) per year, equivalent to driving a car for 272 km.
- Producing a cotton shirt and washing it 52 times has an environmental impact of 697 µPt, which is comparable to driving a car for 55 km.
* each point of comparison includes the equivalent of a car journey
Small ones are expensive
Coins of small denomination have a greater negative impact. They are relatively expensive to produce, and most one- and two-cent coins are used by people only once, increasing the negative impact on the environment.
As Zita Zariņa, a member of the Council of the Bank of Latvia, points out in “Payment Radar”, the value of a one-cent coin is less than the cost of minting it. The cost of producing two-cent coins practically equals their value.
During the year, 81% of one-cent coins and 69% of two-cent coins do not return to circulation in Latvia. This could mean that some of the coins were lost and could contaminate the environment with pathogens present on the coins, including copper, which is potentially toxic to living organisms.
“Latvijas Faktu” survey data show that almost half of Latvian residents support the idea of removing one and two cent coins from circulation: in August 2023, they were 49% of respondents.
Experts of the Bank of Latvia explain that abandoning one and two cent coins would mean the introduction of rounding rules. It would not be the rounding of the price of each item, but the final amount of the purchase. For example, if the purchase amount was 12.23 euros, when paying in cash at the cash register, it would be rounded up to 12.25 euros. On the other hand, if there were goods worth 12.22 euros in the basket, the buyer would pay 12.20 euros at the checkout.
“The experience of other countries shows that this practice does not affect inflation indicators, because in everyday transactions in cash, part of the amount is rounded up, and part – down,” explains Zariņa.
Digital payments are respected in Latvia
“Payment Radar” data show that people in Latvia prefer digital payments, and this trend is growing steadily. The ratio of non-cash and cash payments in Latvia in August 2023 was 73% versus 27%, thus, out of four payments, almost three were made electronically and only one – in cash.
For comparison, in the Eurozone, 55% of surveyed residents prefer electronic payments, a large part of residents (60%) believe that it is important to maintain the possibility of cash payments, according to data compiled by the ECB.
In fact, people in Europe still use cash more often (59% of the time) for everyday payments, but this number is decreasing every year, the ECB reports.
The number of cashless transactions is growing
In August, for the first time in the history of measurements, one resident of Latvia made an average of more than 10 payments per week without using cash. Therefore, payments were made using the Internet, a bank card or other digital payment instruments.
The “Latvijas Faktu” survey also shows that the number of respondents who make payments with a smartphone continues to grow.
This payment technology is used by approximately 20% of the population of Latvia, and their number continues to steadily increase every month. It is used mainly by young people – respondents aged between 15 and 34 years.
The number of ATMs in the Eurozone has generally increased, but their energy efficiency has also increased since 2004 and the environmental footprint has decreased by 35%, according to an ECB study.
There are 888 ATMs located on the territory of Latvia, and for the majority of the population – 99% – an ATM is available within 20 kilometers, reports the Money Circulation Administration of the Bank of Latvia.
The negative impact of cash will diminish
Although the Eurosystem, which includes the European Central Bank and the national central banks of the eurozone member states, is committed to further reducing the environmental impact of banknotes, this will not reduce the availability of cash.
“The Eurosystem is committed to making euro banknotes as environmentally friendly as possible, while ensuring that cash is widely available and accepted,” said Piero Cipollone, a member of the ECB’s Executive Board.
Responsible institutions continue to reduce the impact of euro banknotes on the environment, for example by using only 100% sustainable cotton and prohibiting the disposal of banknote waste in landfills.
In general, 20 European Union countries and more than 346 million Europeans currently use the euro as their official currency.
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2023-12-22 20:30:02
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