Heavy’ metal or light notes?

A writer explores the downside of minting and using coins.

Recently, the Reserve Bank of India (RBI) launched a 1000 rupee silver commemorative coin which was released in July-August 2012 to commemorate of 1000 years of the Brihadeeswarar temple in Thanjavur, Tamil Nadu. Although, the Parliament of India approved a bill in 1975 to mint coins up to denominations of Rs 1000, the government never issued coins worth more than Rs. 150. The 1000 rupee coin was issued to mark a very significant aspect of Indian history. Incidentally, it is the first time that the Mumbai Mint issued the silver coin of Rs. 1000. The coin, weighing 35 gm, contains 80 per cent silver and 20 per cent copper.

But coins pose some practical difficulties. They are heavy and hence harder to carry than paper money. It is tough to make distinct coins for a wide range of denominations. Many countries have at most 5 or 6 denominations of coins since bills are larger. Paper money is easy to identify by size, colour and design. Moreover, the transportation of paper money would be much simpler, safer and cheaper than of metallic ones. It saves gold and silver from being locked up for other reasons. Notes can be counted much faster than metallic coins even when they are in large numbers. This is not all. Paper money can be deployed quickly during national emergencies uses such as war, fire, flood or economic depression. Even a small child can recognize paper money while one can easily miss metallic money at any time. With the RBI ready to introduce plastic notes on an experimental basis, one should observe if they offer the promised advantages over paper currency.

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