What Is Coin Currency?
Coin currency is a form of money used by many governments. It consists of round metal pieces that contain a fixed amount of precious metal. Metals like silver, gold, copper and zinc are the most common. In addition to these metals, some coins have been made from leather, paper, card and other materials. Coins are generally produced by a mint in accordance with national law and minted at a rate that ensures the production of sufficient coins to meet the nation’s demand for them. A coin’s value is determined by its metal content and its design, and in some cases by the social or political history of the time when it was minted.
In the modern economy, coins are still a critical component of commerce. Their use is especially important in the case of small denominations, such as quarters, dimes and pennies. Coins are also often used in place of cash to pay for services, such as parking meters, subway rides or laundromat washing machines. As such, they are essential to the functioning of most economies.
Unlike bills of exchange or paper money, coins usually retain their value as a medium of exchange throughout the ages. The use of cast-metal coins as a medium of exchange dates back to ancient times, when these metal pieces had significant token value. Until the development of bills of exchange in medieval Europe and paper money in China, coins were the primary means of conducting business.
Because of their intrinsic value, coins have always been prized and hoarded by those who could afford to do so. These coins serve as a record of the wealth and power of cities and states, and they reveal a great deal about the economic and social history of their time. Studies of the distribution of coins can help to define territorial limits and illustrate major commercial connections.
Although coins have a relatively low purchasing power, the vast majority are still in circulation. When a bank or other financial institution needs to supply currency to its customers, it places an order with the local Federal Reserve Bank. The Fed then supplies the requested currency using a combination of recirculated coin and new currency.
The current face (fiat) value of most coins is much less than their metal content. Exceptions to this rule are bullion coins containing copper, gold, silver or other precious metals. These coins have nominal (purely symbolic) face values, but as they are not intended for regular circulation their face values have little relevance. Examples of bullion coins include the British sovereign minted by the United Kingdom, the American Gold Eagle and the Canadian Maple Leaf.
Coins are usually minted in sets of denominations, with each denomination having its own distinctive design. The side of a coin bearing the image of a monarch, other authority, or a national emblem is called the obverse, while the opposite side, which may carry a variety of types of information, is known as the reverse.