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Question
Dear Pallas

http://en.wikipedia.org/wiki/Currency
http://en.wikipedia.org/wiki/Coin#As_currency


There are mainly two currency forms used in all countries viz paper notes and coins.

What are the reasons that the coins have always been have a lower value as compared to paper notes ? i.e. nickles, dimes, penny, quarters etc

Is it because coins manufacturing is more expensive than paper notes as it is made of metal ?. It is because of the metal weight as compared to paper notes ?. Paper notes are considered more secured currency forms as compared to coins ?. Automated Teller Machines (ATM) have to be modified for accepting coins ?.

Do you feel Coins also can be manufactured in future with a high
denomination currency value ?.

As a example, can we have $5, $10, $50, $100 etc currency also as coins ?.

Awaiting your reply,

Thanks & Regards,
Prashant S Akerkar

Answer
My recollection from history of economics is that paper replaced coins because is lighter and easier to transport. also, during the times of gold standard and silver dollars, the paper was convertible into gold or silver on demand.  In the old times, before paper bills, coins were made of valuable metals like gold and their intrinsic value spoke for themselves. Nowadays, you may find that in countries suffering from high levels of inflation and where their currency has lost value, coins are sold for their intrinsic value rather than used as legal tender. Illegal practice, I may say so, but, if a 50 cent coin is worth three times its nominal value just for the metal ... well, that is another story.  Practicality is the answer.  

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Pallas21

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I will be happy to answer questions related to applied economics. i.e. economics applied to small businesses and on our day to day existence.

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over 25 years of experience in economics, both as an academic and in the field.

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