(Delivered in Parliament on 14 January 2019)
There are two changes brought about by this Bill, first, relating to the legal tender of coins, and secondly, to prepare for the introduction of intelligent banknote neutralisation systems (IBNS).
On the first change regarding the legal tender of coins, Section 13 of the Currency Act is being amended to introduce a uniform limit on the use of every coin. Under the amendment, a person making payment can only insist on using a maximum of 20 coins of the same denomination. What is probably most significant about the change is that it introduces a limit on the use of $1 coins, which did not exist before. Under the Bill, the limit of 20 coins will also apply to $1 coins.
In the Explanatory Brief to this Bill, the MAS has stated that the rationale is to have a standardised limit on all coin denominations to make it simple to remember and easier to implement. It was further stated that government wishes to encourage persons to use less cash for greater convenience of payments.
While I accept the rationale for the change, I would like to understand if indeed the introduction of the limit on $1 coins is really necessary. Is there a widespread situation of persons over-using such coins for payment? According to media reports last year, MAS decided to review the existing legal tender limits after two cases were reported in 2014. One case involved a mobile shop in Sim Lim Square trying to refund a customer about $1,000 entirely in coins, while the other case involved a man who left $19,000 in coins at a car dealer’s showroom. While these cases may cross the line and be considered unreasonable conduct, are such cases very common?
I am also concerned as to whether certain groups of people who tend to transact in coins will be affected by the new limit. For instance, persons in certain occupations tend to earn their income from customers in coins e.g. hawkers of cooked food, and buskers who sing for change. Once the Bill is passed, they can no longer insist on tendering $1 coins to pay for any item over $20. Would the change cause hardship to such persons? Some might say that these persons could always use the coin machines at banks to deposit their coins into their bank account, and thereafter withdraw currency notes to use. However, there are Singaporeans today who do not have a bank account or are not approved by banks to have one. How will they be impacted?
The second change brought by this Bill is to prepare for the IBNS. The Bill introduces provisions to legalise the use of IBNS as part of security systems to protect the movement of cash in transit (CIT). IBNS would operate to damage or deface currency notes when it is detected that a CIT robbery is imminent, thus rendering the notes indelibly marked or altered. The Bill contains provisions to state that such notes cannot be legally used. The Bill also carries amendments to the Private Security Industry Act to require those who intend to sell IBNS to obtain a licence to do so.
The IBNS is an application of primary crime prevention, by reducing the rewards of crime, or increasing the chances of detection. The theory is that an intended CIT robbery would lose its appeal if the perpetrator knew that the loot would be rendered worthless, or that their hands or bodies would be stained with a substance that could provide forensic evidence to link them to the crime scene. IBNS technology has been in use for more than three decades in Europe and found in ATMs, vending machines and containers used in CIT movements.
If the IBNS is successful in deterring CIT robberies, there will be potential spillover cost-efficiencies. CIT which is enhanced with IBNS may no longer require armed guards and armoured vehicles. This may allow re-deployment of such guards and vehicles to other areas, which will alleviate the current manpower shortages in the auxiliary police. There are also potential savings for organisations who need CIT security, such as Town Councils, since they can save on the service fees of armed auxiliary police, which are relatively high.
That said, IBNS is just one part of the security ecosystem for CIT. What is critical is that the IBNS is accompanied by secure pre- and post- handling, so as not to create vulnerabilities before the cash enters an IBNS environment and after it leaves.
Overall, I am in support of the Bill.