What Is Coin Currency?
Coin currency was one of the first forms of money. It was made of precious metals, like gold and silver, and used in trading transactions across the world. People favored coins because they were more durable and portable than other commodities, such as grains or livestock. They also had a standard weight and value, which made them easy to exchange for other goods and services. Coins were prized, often hoarded, and frequently buried for safety. As a result, many coins from ancient civilizations still survive today. The study of these coins provides valuable information about the development of economic and social structures of past societies.
There are several different types of coins, each with its own unique physical characteristics and denomination. For example, US coins include the penny (1 cent), nickel (5 cents), dime (10 cents), quarter (25 cents) and half dollar (50 cents). Each type of coin may have different weight, size, color, design and security features. In addition, there are commemorative coins that honor current and historical events and people and are not produced for circulation.
A coin is in circulation when it gets passed around from bank to store to person and back again for payment of goods and services. When a person saves coins in a piggy bank, they take them out of circulation and are called “uncirculated.” The United States Mint makes new coin each year, but only about 20% of the total number of coins in circulation come from the minting process. The rest comes from people re-using their coins in the economy or taking them to banks for deposit.
When a bank, credit union, savings and loan, or other financial institution needs cash, they place an order with their local Federal Reserve Bank. The Fed then supplies the establishment with a mix of recirculated currency and coin along with new currency. Learn more about the cash lifecycle (Off-site) and watch a video on the order process on the Board of Governors’ website.
Each year the United States Mint determines the annual coin production, but the Federal Reserve’s National Cash Product Office influences this by providing the Mint with monthly coin orders and a twelve-month, rolling coin order forecast. The Mint then sells the new coins to Federal Reserve Banks to purchase at face value. Learn more about the coin production process on the Mint’s website (Off-site). Once received, these coins are delivered to banks around the country so they can enter circulation.