What Is Coin Currency?

What Is Coin Currency?

Coin currency is money in the form of a circular object, minted from precious metals or, more recently, base metals. Coins are used by governments as a medium of exchange for goods and services. Their value is determined by the material they are made of, their rarity, historical significance, aesthetic appeal and other factors. The value of bullion coins, which are not monetized by the issuing authority and have no face value, depends on the market for the particular metal they contain.

Coins are one of the oldest forms of money, and their history reflects the economic, social, and political changes and challenges of different times and places. The first coins were made from precious metals around 600 BC in ancient Lydia (modern-day Turkey). Their standardized weight and value helped make them easier to trade than other commodities such as grain or livestock. As coin-making technology developed, it became possible to make smaller and more widely distributed coins from less valuable materials.

The side of a coin bearing the image of a monarch or other authority is called the obverse, and the reverse usually carries various types of information such as the year of minting and the name of the country. A coin’s denomination is shown on the obverse or, in some cases, on the reverse. Coins may also have a legend or motto.

Most coins are round, but they can be made in other shapes as well, from squares to polygons to wavy-edged circles with eight or twelve flat sides. They may be plated with a variety of materials such as silver or gold, as well as a range of other chemicals and synthetics.

The circulating supply of coin and paper money is determined by the authority that issues it, which determines its stability and reliability as a store of value. A coin that has intrinsic value can retain its worth even if the issuing authority collapses, while paper money that has extrinsic value (i.e., not backed by precious metals) can lose value if the authority prints too much of it or fails to manage its economy well.

When financial institutions such as banks, credit unions and savings and loans need additional currency to serve their customers, they can place an order with a Federal Reserve Bank. The Fed will then provide the institution with a mix of recirculated coin and currency, which is usually supplemented by new currency. To learn more about this process, check out the Cash Lifecycle page and Currency and Coin Frequently Asked Questions on the Federal Reserve Board’s website.