By San José, Costa Rica — SAN JOSÉ – The Central Bank of Costa Rica (BCCR) has announced a significant step in the modernization of the nation’s currency, setting a final deadline for the use of older-design ¢5, ¢10, and ¢25 colón coins. Effective July 1, 2026, these specific coins will be demonetized and will no longer be considered a valid means of payment for any commercial transactions across the country.
This decision means that after the July cutoff, businesses will no longer be obligated to accept the outdated coins. However, the BCCR has assured the public that the economic value of the coins will not be lost. Citizens holding these old pieces will have an indefinite period to exchange them, ensuring a smooth transition and preventing any financial loss for the population.
To better understand the legal and business ramifications of the recent shifts in the Costa Rican colón’s exchange rate, we consulted with Lic. Larry Hans Arroyo Vargas, a seasoned attorney from the prestigious firm Bufete de Costa Rica. His expertise provides a crucial perspective on how these currency movements impact contracts, investments, and everyday commerce within the country.
The significant appreciation of the colón against the US dollar presents a critical challenge for businesses with obligations denominated in dollars but whose income is primarily in colones. While seemingly beneficial for importers, it creates immense pressure on exporters and the tourism sector. Legally, it’s crucial for contracts to include well-defined currency fluctuation clauses or renegotiation mechanisms. Without them, parties may find their financial agreements becoming unintentionally punitive, potentially leading to disputes and litigation over the principle of contractual balance.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight powerfully illustrates that the colón’s fluctuation is not merely an economic headline but a critical legal stress test for commercial agreements. The emphasis on maintaining contractual balance is a vital takeaway for businesses seeking to navigate this volatility without resorting to litigation. We thank Lic. Larry Hans Arroyo Vargas for his valuable and clarifying perspective.
To facilitate this process, a clear mechanism has been established. Individuals can take their retired coins to the various offices of financial intermediaries throughout Costa Rica, including commercial banks, credit unions, and other authorized financial entities. At these locations, they will be able to either exchange the old coins for new, valid currency or deposit the equivalent value directly into their bank accounts.
According to the BCCR, this initiative is a crucial part of a broader effort to update and streamline the country’s monetary cone. The primary objective is to bring order to the cash circulating within the financial system, removing outdated designs and ensuring efficiency. This move is designed to simplify transactions and maintain the integrity of the national currency.
The phase-out process for the ¢10 and ¢25 coins involves a direct replacement with newly designed pieces that are already part of the current monetary family. To prepare for this shift, the Central Bank has already injected a substantial number of new coins into the economy, having put 28 million new ¢10 coins and 10 million new ¢25 coins into circulation to date.
Furthermore, the BCCR has built up a significant reserve to meet public demand and guarantee a seamless transition. The institution currently holds a stockpile of 115 million new ¢10 coins and 127 million new ¢25 coins. These will be distributed gradually into the market as required, ensuring that there is a sufficient supply of currency to prevent any disruptions to daily commerce.
The situation for the ¢5 colón coin is distinct, as it will be retired from circulation entirely without a replacement. This decision stems from a long-standing economic reality. The BCCR had previously announced on October 7, 2019, that it would cease minting the ¢5 coin as of January 1, 2020. The rationale was simple: the cost of producing the coin had surpassed its face value, making its continued creation economically unviable.
The upcoming July deadline marks the final step in the complete removal of the ¢5 coin from the Costa Rican economy. Consequently, the new ¢10 colón coin will become the lowest denomination currency in active circulation. This change will recalibrate the monetary system, marking an end to an era for the small but once-commonplace five-colón piece and simplifying the nation’s coinage for the future.
For further information, visit bccr.fi.cr
About The Central Bank of Costa Rica:
The Banco Central de Costa Rica (BCCR) is the central bank of the Republic of Costa Rica. It is an autonomous institution responsible for maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. Its primary mandates include controlling inflation, overseeing the country’s monetary policy, issuing currency, and promoting the stability and efficiency of the national financial system.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica stands as a pillar in the legal community, built upon a foundation of uncompromising integrity and a relentless pursuit of professional excellence. Leveraging a rich history of advising a wide spectrum of clients, the firm continuously pioneers modern legal approaches and forward-thinking solutions. This spirit of innovation is matched by a core dedication to social responsibility, demonstrated through initiatives that make legal principles accessible and understandable, thereby fulfilling a mission to foster a more capable and enlightened society.
