Small money is hard to come by

Small change has become scarcer and scarcer in circulation. Meanwhile, the State Bank of Vietnam said it has been providing small change steadily. Where has all the small change gone?

When making payment at retailers, sellers always prefer smaller value banknotes. They grimace unhappily if you give them a VND500,000 bill. In Vietnam, old tattered notes and blackened coins may be more favored than sterling larger-value ones.

The shortage of small change has become more serious these days, as people rush to buy goods for Tet. Supermarts, vendors, shops and trade centers all complain that they do not have enough small change (VND500, VND1,000, VND2,000 and VND5,000) to pay to clients.

The owner of a pharmacy on Road No 13 in Thu Duc district, HCM City, said that she needs several millions of VND in small change to pay clients. In order to get small-value banknotes and coins she promises children who sell lottery tickets that she will buy a lot of tickets if they agree to change money for her.

An employee at Nguyen Van Cu book store said they need some one million VND a day in small change, and it has signed contracts with the nearby Phuong Nam Bank branch to provide small change.

If you go to Big C supermart, you will see a board that says the supermart needs small change and will offer 1% of the value for all small monies exchanges for big (i.e. if you provide VND1mil in small change, you can get VND1.1mil in big-value bank notes). Regardless, the supermart is still having trouble meeting the demand for small change.

At traditional markets, vegetable sellers always ask consumers to accept chili or mints as change. At supermarkets, cashiers automatically give chewing gum or envelopes instead. In fact, a lot of consumers are unhappy with this system because they are forced to buy products they do not want.

In 2003, the State Bank of Vietnam issued coins with face value of VND500, VND1,000, VND2,000 and VND5,000. At that time, the coins were not welcomed by sellers and buyers. However, the situation has become quite different: buyers and sellers have to use coins because they have no other choice in getting small change.

The disappearing coins

Hoa, a housewife in Binh Thanh district in HCM City said that she does not want to keep coins in her wallet because she often drops and loses them. Instead, she puts all her coins into a clay piggy bank. Recently, she counted up her piggy bank savings, which amounted to VND2mil.

For families with small children, parents and grandparents always give children coins as gifts, which are always put into piggy banks. At the end of the year, just before Tet, the money is used to buy clothes and toys for children.

Suppose that every family spends VND50,000 on everyday expenses, including VND20,000 in small change, then 1mil families will need VND20bil a day. Supposed that every family has VND50,000 in small change in their piggy banks, then 1mil families will keep VND50bil, meaning a lot of small money resources are not in circulation.

Money issuer’s responsibility

Analysts say the shortage of small change would not be so serious if the State Bank issued banknotes instead of coins.

It seems the central bank has ‘forgotten’ the customs of their own people. Meanwhile, the system of vending machines where people can utilize coins has not yet developed.

In fact, the lack of small change once occurred in the years between 1986 and 1990. At that time, the money issuer thought that small change and big-value bank notes were both money and did not pay attention to issuing small-value bank notes. As a result, people had to accept changing money at a 10/9 ratio (giving VND10 to get VND9 back).

It is clear that the money issuer has not carefully considered societal habits and characteristics when issuing coins.