If a coin is minted the material might cost less or more then the monetary value on it how are the governments assigning values to it?
In: Economics
It used to be in the old days that coins were worth more or less their material value.
But hose days are long gone.
Governments went from coins made of actual precocious metals to just handing out coins and bank notes that were worth a certain amount of that metal and could be exchanged for it.
Those days however are gone too.
Nowadays money is just money and the only thing giving it value is everyone agreeing that it has. (It really complicated.)
Coins are usually made out of materials worth less than their nominal value. The mints effectively make a profit by literally making money. This is called “Seigniorage”.
Some coins actually cost more to make than they are worth. This is the mint losing money, by making money and normally considered a really dumb move.
In the US a 1 cent coin cost more than 1 cent to make for example.
Latest Answers