Singapore, 9 April 2020... The Monetary Authority of Singapore (MAS) urges individuals and businesses to use digital financial services and e-payments, and minimise visits to the premises of financial institutions (FIs). This will contribute to the effectiveness of the elevated safe distancing measures announced by the...
"Currency Amendment Bill" - Second Reading Speech by Mr Ong Ye Kung, Minister for Education, On Behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister-In-Charge of The Monetary Authority of Singapore on 14 Jan 2019
1 Mr Speaker, on behalf of the Minister-In-Charge of MAS, I beg to move, “That the Bill be now read a second time”.
2 The Bill makes amendments to the Currency Act in two areas. First, the legal tender limits for coins. Second, the offence of mutilation of currency notes, to enable the Ministry of Home Affairs (MHA) to license companies that sell Intelligent Banknote Neutralisation Systems (IBNS) or offer cash transportation services using IBNS.
Legal Tender Limits for Coins
3 First, the legal tender limits for coins. The Currency Act places legal tender limits on each coin denomination that are used for payment. The current limits are: $2 for 5-cent, 10-cent and 20-cent coins; $10 for 50-cent coins, and no limit for $1 coins. This means under the Act, a customer can use coins within these limits and legally the seller has to accept the payment.
4 Legal tender limits minimise inconvenience to vendors and their waiting customers. However, a couple of high profile news stories surfaced in 2014 where large quantities of coins, including $1 coins, were used for payment. One case involved the payment of close to $20,000 in coins at a car dealer’s showroom. Another involved over $1,000 worth of coins at a handphone shop at Sim Lim Square.
5 Thereafter, MAS received public feedback on the need to place a legal tender limit on $1 coins. MAS agreed that it was useful to do so.
6 We also took the opportunity to revise the basis for setting legal tender limits. The different value limits for different coins currently are confusing to many and not easy to remember. Further, instead of a value limit, we will limit the number of coins used, since the processing time and effort for coin payment depends more directly on the number of coins used, and less the total value of the coins. For example, it does not make sense to set a value limit of $2 for both 20-cent coins and 5-cent coins, which means that while a customer can use up to forty 5-cent coins, he can only use ten 20-cent coins.
7 We conducted a public consultation exercise on the proposed revisions in 2017. There was broad support from respondents to introduce a limit for $1 coins and have a simple and uniform limit for all coin denominations that is easier to remember.
8 The Bill will therefore streamline the legal tender limits for coins to a uniform limit of 20 coins per denomination in a single payment. This means that a payer can use up to 20 pieces each of 5-cent, 10-cent, 20-cent, 50-cent and $1 coins per transaction. This is much simpler than the current legal tender limits.
9 Notwithstanding the legal tender limit, a customer and a vendor can mutually agree to transact using quantities of coins above the limit. But I am sure such instances will be infrequent, especially when more people switch to using electronic payment.
Use of IBNS
10 Mr Speaker, I will now move to the second area of amendment to support MHA’s plan to allow the use of IBNS.
11 IBNS is a security system installed in containers used in the transportation of currency notes. It will permanently damage or deface the currency notes housed within it when there is an attempted robbery. This deters robbery because the loot can be easily destroyed. IBNS is used in many countries in the European Union.
12 Some companies intend to introduce IBNS services in Singapore. MHA will facilitate this so that it is available to banks and other businesses. There are certain advantages, such as replacing armed Auxiliary Police Officers who are needed today to transport large amounts of cash, and reducing the risk of violent crimes. This can free up scarce armed Auxiliary Police Officers for more critical operations.
13 MHA intends 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 intends to obtain industry feedback to develop the licensing conditions. MHA and MAS will also conduct a joint education exercise to inform the public on the identification and handling of IBNS-damaged notes.
14 The Bill will amend section 23 of the Currency Act to make clear that an IBNS-damaged note is not legal tender. Under specific conditions, the Bill will exempt a holder or applicant of a security service provider licence from the offence of mutilation of currency notes.
15 Two related amendments will also be made to the PSIA, so as to give effect to the Currency Act amendments.
16 Mr Speaker, I beg to move.