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Coins Replace Bank Notes in Circulation
 | By Richard Giedroyc, World Coin News
September 29, 2008 |
At one time when coins were specie (valued at their precious metal content) rather than fiat money (accepted in commerce only due to the public's trust in the domestic economy and government issuing the coins) coins rather than bank notes dominated the currency landscape.
Following first the demise of gold coins and then silver coins in circulation during the 20th century, all coins increasingly became relegated to the function of small change, while bank notes flourished.
Towards the end of the 20th century governments began to realize that although it was not realistic to revive large denomination coins composed of precious metal for circulation it did make sense to replace low value bank notes with base metal composition coins of the same denomination simply because of production costs.
While the United States has struggled to get a dollar coin into circulation due to the continuing US refusal to withdraw the bank note of the same denomination, Canada to its north and Mexico to its south are among the many countries worldwide that have proved this concept makes sense from a cost standpoint. A coin of roughly the value of one US dollar typically circulates for between 20 and 40 years, while a paper bank note of about the same value typically wears out in between six and 18 months, according to countries that have in recent years replaced bank notes with coins.
Two more countries have recently announced they will follow this scenario, both the Czech Republic and Nicaragua are replacing low denomination bank notes with circulating coins of the same face value.
The Ceska Narodni Banka or Central Bank of the Czech Republic recently announced it will be replacing its 50-koruna bank note with a coin. Both the coin and the bank note, according to the June "MRI Last Minute News" bulletin issued by Monetary Research Institute in Houston, Texas, "will co-circulate and continue to be legal tender."
While the 50 koruna has been the lowest denomination bank note in circulation it conversely will become the highest denomination circulating coin. The note was introduced in 1994, then altered in 1997 to include a see-through circle security device situated at the top right of the front.
Details of the new coin were not clear in time for this article. The bank note of the same denomination depicts St. Agnes of Bohemia in rose, brown, and multicolor on the front, with an "A" and heraldry on the back. The new 50-koruna coin (and the bank note as well) has an exchange value of about $3.12 US.
On June 16 the Banco Central de Nicaragua or Central Bank of Nicaragua issued a new 10-cordobas coin also planned to co-circulate alongside a bank note of the same denomination. The recent MRI bulletin said, "It is expected that the new coins will eventually replace the notes."
Nicaragua appears to be looking ahead regarding its coins and currency. A new paper composition 200-cordobas note is on the drawing board, but so is a polymer (plastic) composition 20-cordobas note, the 20 cordobas as the soon-to-be lowest bank note denomination in use being more likely to receive significant wear that would shorten its circulation lifespan if it were composed of paper. MRI reports a 500-cordobas "new note planned for future release."
A 10 cordobas, be it either a coin or a bank note, is worth about 52 cents US. The current 10-cordobas note is dated May 15, 2003. A vignette of Miguel de Larreynaga appears on the front, with a vignette of the Isletas de Granada on the back. The new coin is distinctively golden in color, depicting national hero Andres Castro on the obverse.
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