What is metallic money?
Metallic money refers to coins made of various metals such as gold, silver, bronze, nickel, and so on. Its worth is guaranteed by the state's exclusive monopoly. The state owns the mining rights to the coins.
Metallic money is that money whose value of money (face-value) is greater than the commodity value (intrinsic value) of money.In other words, metallic money is made of metals which has less value then its face value. For example: metallic coin includes 1 rupee coin, 5 rupees coin etc.
Georg Friedrich Knapp (1842–1926) coined the term "metallism" to describe monetary systems using coin minted in silver, gold or other metals. In metallist economic theory, the value of the currency derives from the market value of the commodity upon which it is based independent of its monetary role.
1) It had all the qualities of good money. 2) Durable. 3) It had ornamental and decorative value. 4) It could be stored.
The value of these in exchange of goods is equivalent to their actual/ intrinsic value. Metallic money can be categorized into full bodied coins and token coins.
Metallic money
The use of metal for money can be traced back to Babylon more than 2000 years bc, but standardization and certification in the form of coinage did not occur except perhaps in isolated instances until the 7th century bc.
While the use of metal for money can be traced back to Babylon before 2000 BCE, standardized and certified coinage may not have existed until the 7th century BCE. According to many historians, it was during this time that the kingdom of Lydia (in present-day Turkey) issued the first regulated coins.
a) Representative Money: Representative money is that money which is fully backed by equal metallic reserve. The holder of a bank note can easily get it converted into metallic (gold & silver) form on demand. b) Convertible Money: It is the form of money which can be converted into gold, silver i.e. metallic reserves.
So kings hit on the idea of minting coins from precious metals, stamping them with an emblem that guaranteed their weight and value. Metal money ticked all the money boxes and because it had intrinsic value, it could be used to trade with other communities.
Most of our coins are metal sandwiches. The outside layers are three-quarters copper and one-quarter nickel, and the "filling" is solid copper. Pennies are made of zinc coated with copper. Only nickels are one solid material—that same 75% copper/25% nickel alloy.
What is metal money made of?
Today's coins are made from metals such as nickel, copper, and zinc. Instead of using one metal to make a coin, multiple kinds of metal are pressed together into layers. This is called a “clad” coin. The layers of a clad coin are like a sandwich.
Metals are usually ductile, malleable, shiny, and can form alloys with other metals. Metals are tremendously important to a high energy society: they transport electricity in the electrical grid, and provide many services. Various manufacturing processes around the world uses more than 3 gigatonnes of metal every year.
The value of metallic money is usually determined by the metal content itself. This type of money has been historically used in various civilizations as a medium of exchange, unit of account, and store of value. Metallic coins specifically refer to the metal currency in the form of coins.
What are current circulating coins made from? Quarters and dimes are composed of cupro-nickel clad, with a pure copper core, and an outer layer of a 75 percent copper, 25 percent nickel alloy. Nickels are made from the same 75-25 alloy, and the cent, once a copper coin, is now composed of copper plated zinc.
There have been many forms of money in history, but some forms have worked better than others because they have characteristics that make them more useful. The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability.
People bartered before the world began using money. The world's oldest known coin minting site was located in China, which began striking spade coins sometime around 640 BCE. Since then, the world adopted banknotes and moved into digital forms of payment, including virtual currencies.
No one knows for sure who first invented such money, but historians believe metal objects were first used as money as early as 5,000 B.C. Around 700 B.C., the Lydians became the first Western culture to make coins. Other countries and civilizations soon began to mint their own coins with specific values.
First metal money — coins
The first metal coins date back to the 7th century BCE in Lydia (modern Turkey) and China. In China, metal coins were made of bronze and shaped like farming tools.
But, under monometallism, scarcity of metal may create scarcity of money supply which, in turn, may hinder economic growth. iv. Lacks Price Stability: Since the price of the metal cannot remain perfectly stable, the value of money (or the internal price level) under monometallism lacks stability.
The Mesopotamian civilization developed a large-scale economy based on commodity money. The shekel was the unit of weight and currency, first recorded c. 3000 BC, which was nominally equivalent to a specific weight of barley that was the preexisting and parallel form of currency.
Which metal is used first by human?
The first discovery of metal probably happens during the period of 4000BC and first metal that was used by man was copper.
The use of metal for money can be traced back to Babylon, prior to 2000 BCE. Standardization and certification in the form of coinage did not occur except perhaps in isolated instances until the 7th century BCE. Historians generally ascribe the first use of coined money to Croesus, king of Lydia, a state in Anatolia.
A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand.
Expert-Verified Answer
It refer to money which is made of metals like gold, silver, copper, etc. ... Paper money is comparatively more portable but less durable. Metallic coins are comparatively less portable but more durable.
: a monetary unit which is designated by a government to serve as the basis of its currency system and into which other types of money in the country are convertible compare standard of value.
