gold coin, silver coin and gold standard
In situations where the commodity is metal, typically gold or silver, a government mint will often coin money by placing a mark on the metal that serves as a guarantee of the weight and purity of the metal. In doing so, the government will often impose a fee which is known as seigniorage.
The role of a mint and of coin differs between commodity money and fiat money. In situations where there is commodity money, the coin retains its value if it is melted and physically altered, while in a fiat money it does not. Usually in a fiat money the value drops if the coin is converted to metal, but in a few cases the value of metals in fiat moneys have been allowed to rise to values larger than the face value of the coin. In India, for example fiat Rupees disappeared from the market after 2007 when their content of stainless steel became larger than the fiat or face value of the coins. In the U.S., the metal in pennies (mostly zinc since 1982) and the metal in nickels (75% copper, 25% nickel) has a value close to (and at some times exceeding) the fiat face value of the coin.
In situations where the commodity is metal, typically gold or silver, a government mint will often coin money by placing a mark on the metal that serves as a guarantee of the weight and purity of the metal. In doing so, the government will often impose a fee which is known as seigniorage.
The role of a mint and of coin differs between commodity money and fiat money. In situations where there is commodity money, the coin retains its value if it is melted and physically altered, while in a fiat money it does not. Usually in a fiat money the value drops if the coin is converted to metal, but in a few cases the value of metals in fiat moneys have been allowed to rise to values larger than the face value of the coin. In India, for example fiat Rupees disappeared from the market after 2007 when their content of stainless steel became larger than the fiat or face value of the coins. In the U.S., the metal in pennies (mostly zinc since 1982) and the metal in nickels (75% copper, 25% nickel) has a value close to (and at some times exceeding) the fiat face value of the coin.