Coin Currency and Stablecoins
Coin currency has two main sources of value: the intrinsic value of the metal they are minted from and the market exchange value. Inflation lowers the face value of coins, thereby reducing their value. For example, a pre-1965 US dime contains less than a tenth of an ounce of silver. In addition, a pre-1982 US nickel has less copper than its pre-1965 counterpart due to a rise in the value of copper.
A true stablecoin is an asset that has a stable value against a reference asset, such as USD $1. This stability is achieved through two commitments: the issuer agrees to mint coins at par, and the issuer holds assets to back its redemption obligations. These reserve assets should be liquid, and the issuer should prioritize their holders over other creditors.
Coin currency’s development dates back to ancient times. The earliest coinage is attributed to the Kingdom of Lydia in the fourth millennium B.C. In the same time period, true coins were also developed in China and India. The use of coins in both places is thought to have been spurred by the need to exchange goods and services.
Coins are usually circular, although not all of them are. Some have wavy edges, such as the 20-cent coin of Hong Kong. There are also some tri-metallic coins, such as the one euro coin. In the 1990s, France also issued a tri-metallic coin that was used to commemorate an important event. Some countries issue coins with unusual shapes, including the guitar-shaped coins of Somalia and Poland. In the 1970s, Swazi coins were minted in squares and polygons.
Coins are often minted with the name of the issuing nation, although the names of these nations may not be the only elements on the reverse. For example, the euro coin has a large number one on its obverse, and features the word EURO and the designer’s initials. Interestingly, Austria is currently in violation of these rules.
However, in the short term, a stablecoin offers lower costs and a more competitive exchange rate. They can also make conditional cash transfers easier, and could connect many unbanked populations with the financial system. The downside of stablecoins is that they are subject to the same limitations as other coins, including the lack of interoperability. Furthermore, each holder of a coin would need to be onboarded by an issuing bank. A bank would also need to build infrastructure for intra-bank transfers.
The third series coins are made of five denominations, and represent the development of Singapore as a nation. The coins are made of different metals and sizes, and have tactile features. The 50-cent coin, for example, has a micro scalloped edge pattern. In contrast, the 10-cent coin has a milled edging. In addition, the 1-dollar coin still retains its octagonal frame.