5

Recently, there's this news circulating that our country's government is planning to change our 20 pesos paper bill into a coin. I believe there are issues solved here but I can not tell what. So, I'd like to ask you guys - What are the pros and cons of changing a paper bill to a coin?

Many would argue that we have a lot of other important issues in our country that needs to be focused on instead of this silly move of changing a note into a coin. But let's just play the role of a patriotic citizen here and try to see possibilities that this simple move is actually helping (in terms of government funds, perhaps?) to enable the government do the other "important" stuffs. Like what may seem a random pawn move but is actually necessary for the future moves on the board.

  • 1
    I note that the US has a $1 bill, but that is rather small in value compared to the rest of the world. The smallest Euro note is 5 euros, about $5.60. The smallest Japanese bill is 1000 yen, which is about $9.20. The smallest Canadian bill is 5, which is about $3.75 US. The smallest British note is 5 pounds, about $6. – Ross Millikan Jul 28 at 1:02
  • 1
    Please edit your question to clarify what you mean by "our country". – Roger Jul 29 at 19:19
10

I can't speak specifically about your country, but generally speaking, there is a balance to be struck between the cost of production (a bill is significantly cheaper) and durability (a coin lasts significantly longer).

If the 20 peso bill is being used more and more frequently, then it will wear out more and more quickly. This could mean, in the long run, that the coin becomes less expensive to produce than continuously replacing these bills.

  • For the US, one dollar bills are a lot more expensive than one cent coins. I don't know about dollar coins. – o.m. Jul 27 at 12:24
  • Notes cost about 10¢ but $1 notes have fewer security features, and cost about 6¢. The cost of coins depends more on the price of the metal. A larger coin would cost about 8-10¢. Of course, coins last a lot longer. – James K Jul 27 at 14:11
  • @James K: But (in the US) it seems that few people want to use coins. I can't remember the last time I saw a dollar coin or 50 cent piece. – jamesqf Jul 27 at 17:53
  • 3
    That is a fact. But if there was the political will to order dollar notes to stop being made, and dollar coins to be made, there would be no more dollar notes in a short while, because those things wear out quite fast. – James K Jul 27 at 18:02
  • @ColdCerberus the other way around. What a currency is worth determines where to draw the note/coin divide – Caleth Jul 29 at 13:26
5
  • Coins may last much longer than bills. One can find decades-old coins which have been in active use for all the time.
  • Certain security features are easier on bills than on coins (serial numbers, holograph decals, semi-transparent areas). It makes sense to add them to the higher-denomination currency.
  • Small coins are cheaper to produce than small bills.

So it becomes a trade-off. Small units are coins, larger ones are bills. With modest, ongoing inflation, the dividing line shifts upward every couple of decades.

  • Not sure if I got the last part right. Changing whatever is the current lowest bill/note into coins may equalize with ongoing inflation? I have a vague idea of what an "inflation" is but did I understand it right? – Cold Cerberus Jul 29 at 13:23
  • 2
    @ColdCerberus, say a soft drink costs 50 cents and the largest coin is also 50 cents. The vending machine takes the coin and sells the drink. Now every year the adverage cost of things goes up 2%. This does not mean the soft drink will now be 51 cent, but after a couple of years it will be 60 cents. After 35 years, the soft drink will be 100 cents. It makes sense to mint a 100 cent coin and retire the 100 cent bill. – o.m. Jul 29 at 15:59
1

Coins are more practical then notes when it comes to making machines accepting them (parking machines, selling machines, toilet doors etc.). It might be a reasonable argument if such machines are in broad use.

Coins are harder for trivial forge, like printing on home printers. Even if such forges are trivial to detect by trained staff and special devices, having them is also a cost factor.

Coins are more resistant to damage. It's annoying to loose money because your note got damaged. Exchanging damaged notes in banks generates costs for the state.

In end effect, coins vs. notes is a tradeoff between pros and cons of both of them.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.