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Tuesday, 22 November 2011

What is coinage? discuss the various kinds of coinage

COINAGE OF MONEY :-
It means the process of manufacturing metals in to certain shapes to maintain the uniformity in all the coins of same kind. In the old ages gold and silver metals were commonly used as a media of exchange. There were many problems in the transactions of metals. So to remove these problems the government has taken over the sole power of coinage money. Now government converts the metal into standard coins. Now a days it is very easy medium of exchange and tempering with the metallic currency is very difficult.


KINDS OF COINAGE :-
Following are the important types of coinage :

1. Free Coinage System :-
If the people are allowed to take metals to the mint for the conversion in to standard coins without limit it is called free coinage system. Before 1933 this system was prevailing in U.K and U.S.A.

2. Limited Coinage System :-
When Govt. imposes limits on the conversion of metal in to standard coins, it is called limited coinage system. Government keeps in view the currency requirement of the country. Government imposes limits on the free coinage of other metals. Sometimes fee is also charged. The face value is greater than its original value.

3. Gratuitous Coinage System :-
When Govt. does not charge any fee for minting coins it is called gratuitous coinage. This system is adopted at that time when the intrinsic value of bullion is to be brought at par with its face value.

4. Non Gratuitous Coinage System :-
In this system Government charges fee for converting metal in to coins. Sometimes, it charges only minting cost (brassage) and sometimes more than the cost seignior-age.

5. Debasement Of Coinage System :-
When there is a difference in the face value of coin fixed by law and the original value of metallic it is called debasement.

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