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10.27.2006

Fundamental Economics: Minting Currencies

One of the factors to be considered when minting coins is the material value of the currency which should not exceed the assessment that it represents.

For example, the price of the metal that composes a dollar coin should not be way above $1. The reason being is that “enterprising minds” can easily be tempted to gather all the dollar coins, melt it and sell the metal for its higher value.

Here are recent stories regarding coins that are being smuggled and recycled into other forms:

IExpress

Scotsman

Other factors that should be considered include the possible alternative uses of the coin. In the 80’s, the Philippines circulated small aluminum like 5 & 25 centavo coins that quickly disappeared from circulation. An economics professor said that fisher folks found the coins a cheap substitute to “Fishnet Floaters”, which cost a lot more.

The link (below) tells a story about coins being smuggled and used as tokens in gaming machines.

Manila Standard

A few years ago, and probably until now, Philippine coins were also being smuggled to South Korea and used as a cheap (and illegal) substitute to Korean coins when purchasing products in vending machines and when using public telephones.

1 comment:

Anonymous said...

hmmn..