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December 1st, 2008
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Phase-out of obsolete coin signals an end to the heller



By Claire Compton
Staff Writer, The Prague Post
August 13th, 2008 issue

The heller, that diminutive denomination that ends up on the ground more often than on a counter, is in its final days. The 50-heller coin — the last circulated coin valuing less than 1 Kč — will be phased out of circulation as of Sept. 1.
The 50-heller coin enjoyed a five-year reprieve after the Czech National Bank (ČNB) discontinued the 10- and 20-heller pieces in October 2003. Nevertheless, the coin’s march toward extinction was irreversible: Its drop below significant value could not even be saved by the meteoric rise of the crown.
The heller’s inferiority complex can be observed even without any understanding of local currency value. The coin is made of 99 percent aluminum, compared with the greater heft of the steel-and-nickel 1 Kč piece, and is the only Czech coin that isn’t magnetic.
Its composition alone is enough to know that no one takes it seriously.
“Nobody wants to take it back [as change],” said Prague grocery shop owner Babar Hussain. The store keeps very few of the coins in its drawers, and Hussain said he’s looking forward to rounding off the few items that still ring up with the appended 0.50 Kč.
A survey of currency exchange branches on Wenceslas Square revealed that most people have given up on the coin well before the official end date. Tellers at E-change said the company had stopped accepting the coin July 31, while Chequepoint employees began phasing it out at the beginning of last month.
A request at Western Union was deferred wearily to local banks, which are required by the ČNB to change the coins for customers through Aug. 31, 2009. Beyond that, the ČNB will exchange the coins until Aug. 31, 2014.
ČNB Chief Executive Director and board member Pavel Řežábek echoed the public sentiment at an Aug. 12 meeting with journalists.
“The 50-heller coin is a historical symbol ... and it has a very long history, but the shops don’t want to accept them. [They] even refuse them,” he said. “You cannot buy anything for 50 hellers.”
Despite their unpopularity, a massive amount of these coins remains in local pockets.  
As of last August, 410 million 50-heller coins were in circulation, representing 41 per person including babies, Řežábek said.
Despite these numbers, it has become increasingly clear that Czechs don’t recycle the heller. Last August, the ČNB calculated that only 10 percent of these coins made its way back to the bank.
Loose change
ČNB officials say inflation will be unaffected by the phase-out.
Vendors will be able to continue setting prices using hellers by rounding off the final price to the nearest crown. This framework is already in place through a 2003 amendment to the Consumer Protection Act allowing vendors to use defunct denominations when pricing products.
Aleš Michl, an analyst at Raiffeisenbank, said he anticipates a potential “0.1 percentage point” effect on inflation as a result of the heller’s abolition.
“It’s no big deal. I think we have worse problems,” he said, pointing out that the Czech Republic’s potential entry into the eurozone will make the entire currency obsolete. Michl anticipates that move to happen on the crown’s 100-year anniversary in 2019 — a birthday that the heller won’t live to see.
At several million crowns a year, the cost of producing hellers is relatively low, according to the ČNB. The coin has other problematic characteristics, however, such as a tendency to contaminate cash-counting machines due to its fragile aluminum composition.
The heller is not the only casualty shed by growing economies.
The euro cent, distributed in 1- and 2-cent denominations, is minted to prevent retailers from rounding up prices too high. In spite of these efforts, countries including Finland, Holland and Belgium have all but outlawed the 1- and 2-cent coins.
As metal costs rise, dealing with such coins is also becoming expensive. Holland’s De Nederlandsche Bank estimated it would save $36 million annually by not using the two smallest euro cents.
The local government may consider selling the material left over from the 50-heller coins to save costs.
“Depending on how many [hellers] we receive, we may proclaim a tender for selling the metal,” Řežábek said.
Ultimately, these types of coins have become more of a nuisance than a currency.
“We believe the public will welcome the fact that the contents of their wallets will become easier to deal with when these infrequently used coins disappear,” Řežábek said.
— Hela Balínová contributed to this report.

Claire Compton can be reached at ccompton@praguepost.com


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