What Is Coin Currency?
Coin currency is money that is minted and circulated as part of the regular financial system. In the United States, it includes the pennies, nickels, dimes and quarters that you receive as change when making a purchase or the dollar bills that you get when cashing a check. Coins can also be used to pay for services at some businesses. Some coins bear the image of a person, event or location and are worth more than their face value because of their rarity or historical significance.
Coins are made from a variety of metals, including gold and silver, but copper and nickel are more common. Some coins are made of a single metal, while others are bimetallic (made of two different metals). In general, the higher the precious metal content in a coin, the more it is worth.
A coin is usually circular in shape, but not always. Square and oval-shaped coins exist as well, and some coins have wavy edges. In addition to standard coins, the mints of some countries produce commemorative and other special-issue coins that are not meant for circulation.
The side of a coin bearing the image of an emperor or other monarch, other authority or national emblem is called the obverse. The other side, which carries various types of information, including the year of minting, is called the reverse. The space beneath the coin’s main design, or exergue, may be left blank or contain a privy mark or other decorative or informative design feature.
Some circulating coins have more than one face value, but most do not. The exceptions are coins that are intended to serve as collectibles and have a higher precious metal value than their face value, such as the British sovereign or the American Eagle bullion coin. The South African Krugerrand is an example of a coin that has a higher metal value than its nominal (purely symbolic) face value.
Historically, monarchs and governments created more coins than their supply of pure metal would allow by substituting some of the precious metal with base metal. This practice is known as debasement, and it often leads to price inflation.
Some circulating coins that were minted in the past are no longer produced, including the cent, five-cent and one-dollar coin. When commercial banks, credit unions and savings and loans need currency to serve their customers, they place an order with their Federal Reserve Bank, which supplies them with a mix of recirculated currency and coin along with new coin. Learn more about the cash lifecycle (Off-site) on the Federal Reserve Bank of San Francisco’s website.