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  • Category: Miscellaneous

    Why are coins still relevant?

    Do you feel that coins have no relevancy nowadays and it is best to have only paper currency? Discuss the pros and cons of doing away with coins altogether.

    As our rupee value is plunging and inflation is rising, our lower denomination coins should go out of circulation. But why did coins persist even after arrival of banknotes. Banknotes came into circulation first when the British ruled over us. In those days coins had a huge value (rupee), because we had coins with values lesser than a rupee. But as governments and economies shifted these lower denominations became obsolete.

    But why do we use coins now anymore? We are losing valuable metal ores in process. Why can't we print banknotes with lower denominations instead? Or even better, let's start using synthetic materials like plastic and nanomaterials to make banknotes, which offer much more security against counterfeiting.
  • #665220
    True. There is no point in coming with new coins and the coins can be slowly be withdrawn. But coins are having an advantage. They are permanent. There is no problem of getting worn out. If a paper note is in circulation for 10 years, the coin can be in circulation for many more years. Based on the life span of the coin, it may become cheaper over a period of time even though it costs a little high initially. To decide on the cost effectiveness we should take the number of circulations and the life time also into consideration.
    Another point to be thought of is fake coins. Chances of having fake coins may be a little difficult when compared to fake noted.
    When we think these points the coins may become more desirable than coins.

    always confident

  • #665222

    Coins are relevant in India, at least for the next few years because a large segment of the public and the simple services need the coins of denomination 1,2,5,10. These are used by the small Kirana shops, corner shops (selling small chocolates, bananas, cigarettes, soft drinks), small food carts, pushcart vendors, mobile tea/coffee vendors, footwear kiosks at temples, etc. Coins would be integral to the day to day life in the rural areas, wherein people depend on small shops or vendors/hawkers who travel and sell their small items,

    For such services, we still need the coins, more so in the rural areas. Yes, we can change, but it is a logistical nightmare. Firstly we need to get huge quantities of banknotes 1,2,5,10. Then we need to assure the public that all existing coins will be accepted as valid deposits or exchanged at the banks. Then we can see a change.

  • #665224
    Maybe the metal coins are durable, unlike paper note currency which gets torn after a certain period of time. Also, they are easy to carry. Lower denomination notes were also used in the past but we don't see them often in the market nowadaymaybe 1,2,5 rupees notes are withdrawn or they have been stored by the public as these notes are very rarely seen in the market. I don't think it's a better idea to withdraw coins from the market.

    " The two most important days in your life are the day when you are born and the day you find out why? "
    – Mark Twain

  • #665225
    Actually, I want to raise a post on this but you already raised it. As coming to the thread coins are longlasting where currency notes are not longlasting. A one rupee note vs 1 rupee coin which one is long lasting? You tell me...that is why coins still exist.
    Wants are like horses as a rider we need to use the horse halter wisely in order to reach our desired destination safely-- Bhushan

  • #665228
    My first point is, why do you want long lasting currency units? World is moving towards recyclable notes. In this era coins which cannot be recycled and gets circulated are waste of metal. And we know from history that coins are the ones that get duplicated easily. We've seen it under Tuqhlaq regime. But yeah for vendors these small coins mean a lot because they measure their profit with them. But here's the question. Even flower vendors use Paytm today. So why not give them accurate change digitally? I don't see why coins are still relevant.
    The stronger a light shines the darker are the shadows around it.

  • #665230
    I think coins are still useful in many situations especially small roadside tea stalls and eateries. In villages the small kirana shops use them for daily transactions. I also feel that if higher denomination coins are made available then it will be useful for us as sometimes there is shortage of lower denomination notes in the market.

    Coins are not very handy to use as compared to the notes but still they are useful if you can carry them in a pouch or a pocket in the purse.

    Knowledge is power.

  • #665232
    The very essential point is that we are still not equipped with the tools in order to eliminate with these smaller denominations & at the same time using paper notes or metal coins in the smaller denominations have lesser or no values for any of us & due to this we would be in a much bigger losses.

    Few very valid points have been added by the other members as well wherein the overall circulation is also important & due to this the paper note has lost to the credentials. Even on the value addition side, the lower denominations can largely be seen being used at the grocery shops including the smaller vendors wherein the digital medium of payment might not be available. In addition, I agree with #665225/Bhushan when we observe that coins are long-lasting in comparison to the paper notes which liable to be dead before its expected duration.

  • #665236
    In response to #665228/ Aditya Mohan, It would be interesting to note whether the RBI gets the absolute returns against its manufacturing cost or not? In context to slightly higher value notes like that of 50 & above the returns are above their manufacturing cost but in terms of lower denominations like that of 50 Paise or One Rupee, this seems less possible & due to this reason the counterfeiting currencies seems baseless or with little or no chances to come into the picture. And maybe that this is good enough reasons to continue with the small denomination of metal coins.

    In addition, how many of small set-ups are using these digital modes of transactions? Actually, we still have a long way to go to think of a cashless society.

  • #665256
    I think that they are still in use in many parts of the country especially the small shops and small value item sellers where coins are a must for the routine purposes. Coins will remain in use for quite some time in future also.
    Thoughts exchanged is knowledge gained.

  • #665297
    They are still relevant because till now no alternative is found. If the digital mode of transactions is given a thrust then both coins and notes can be reduced. For that, a strong network and security are required. People also need to be cautious and disciplined to migrate to a new system. When the digital mode is used for transactions, every transaction is recorded and in a country where there are still many traders trading without valid documents, it will take a lot of time. Coins are more secure than the paper notes in the sense that the cost of counterfeiting a coin will be more than the denomination of the coin itself. If there is no coin, then what will be used for a toss? Rather depending solely on paper notes a mixture of coins and notes is always better.

    "Life is easier when you enjoy what you do"

  • #665299
    Ok. Some interesting arguments have been putforth. But I still think coins are largely irrelevant to modern Indian economy.
    The stronger a light shines the darker are the shadows around it.

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