Question 33. Define coinage system ?
Answer 33. COINAGE SYSTEM : The art and practice of making coins is known as coinage. The government of the country has only got the right to mint coins and the place where coins are minted is known as 'mint' . The main system of coinage is :
1. FREE COINAGE : Coinage is said to be free if public is allowed to offer bullion for being converted into coins. Before 26th June 1893 , India also had a free courage system and at that time anyone cold take silver to the mint and get it counter into rupee . There can be two jinda of free coinage :
a) GRATUITOUS COINAGE : In a system of free coinage , if no fee is charged by the government gor manufacturing coins, the coinage is called gratuitous.
b) NON-GRATUITOUS COINAGE : When the government charges some amount for converting the metal into coins this system of coinage is called as non-gratuitous .
2. LIMITED COINAGE : Coins is said to be limited if the public is not allowed to offer bullion for being converted into coins and coinage is done only on government account. All the countries in the world follow the policy only limited coinage in present days. There are different opinions regarding the best coinage system . The supporters of free coinage are of view that by following this system there would not be any inflation the country and the people will have faith in the currency of the country. There is a scarcity of precious metals and the same could be saved and used for payment to foreign countries. The coins made of metals will not be melted . In present circumstances limited coinage system is better than the free coinage.