Coins or Banknotes: which would you prefer?

Your views on paper currency (fiat) versus coin currency: the Nigeria case study
I wish I could give you a detailed history of how the Nigerian currency migrated from the coins to the banknotes for the purposes of economic growth, preference for cash transactions, and convenience. However, the summarized history can be found CBN

For a few of us here in Nigeria, we grew up with banknotes, but we had the privilege of using the coins (50 kobo and one Naira). Whenever you had the coins on you, it was very easy to know who had money on him or her. Well, for the sake of the convenience aforementioned, other Naira denominations kept surfacing, and now, in Nigeria, N1000 is the highest paper denomination. There was a time in Nigeria when rumors or speculations had it that a N5,000 denomination would be released. Well, that may be a topic for another day.

It is agreed that there are many influences on a nation’s economic growth, which range from but are not limited to resources (including human capital), policies, forex trading, inflation, etc. Perhaps these and many more factors account for the poor valuation of the naira in the global market. Our parents fondly told us that whoever had money such as N500 ($0.67) or thousands of Naira some two decades ago was considered rich. Some of their salaries were in the range of hundreds of naira, which was significant as regards the economy.

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I was opportune to grow up during the time the coins had some degree of dominance in the Nigerian market, which has gradually been effaced unless for recent times when some of the coins resurfaced during the Nigerian cashless policy. I remember having my pockets loaded with several coins, which shamelessly announced their presence to anybody that cared to listen.

The one Naira coin was heavier than the fifty kobo and was almost always shining, a beauty to behold. Over the years, different paper denominations popped up, with occasional changes to the designs.

Very recently, my bank account has been in the red and occasionally entered the negative. This has been recurrent since the fuel subsidy removal, which for me has made me spend a significant amount of money on fuel. However, I realized I had fewer expenses when I had no money in my account (where would the debit alert come from?). To even buy airtime or data could be a challenge, but I am here with you and physically going to work. I have had to show my account balance to some people so that they could know and believe how broke I have been. Thankfully, I have some cash on me to move about with.

NOW TO THE BIG QUESTION

Would having coins right now be preferable to banknotes?

Coins are durable and heavy when carried about, especially if the amount is significant or large. It is less likely for any individual to lose those dangling coins (you will know if they are not there). Have you seen a coin broken into two? It is very unlikely. Well, I’ll say that there were reported cases of children swallowing coins (a wonder, right?). It was amazing during the recent cashless policy in Nigeria, where the central bank of Nigeria (CBN) limited the amounts issuable to individuals and organizations. It was reported that some people were paid in coins.

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BANKNOTES: Minted money has this aroma that satiates the mind, telling you how good it is to have money. My mom was found separating neat banknotes from dirty ones. Have you seen some dirty and mutilated Naira notes? Some of them could be disgusting to behold, and some people outright reject them when they are offered. Everyone likes neat money. Well, this is a big disadvantage of the banknotes. Can we talk about the fake banknotes? Well, you and I know that there are numerous fake banknotes in circulation (I wonder if there are fake coins). And we all know you can have millions of Naira in your pocket and nobody around you would detect it. That’s the convenience of the banknotes. And because of that convenience, it is easy to spend the money, as they are very accessible. Whenever you are opportune to go to a club or party where the banknotes are sprayed, you will marvel at how much an individual flaunts relentlessly. I do not want to imagine people spraying coins; I am certain there would be lots of bruises and trauma if that occurred.

I hope you get my point about why I said I had fewer expenses when I had no money in my bank account. Perhaps having coins would make me spend less if the economy was favorable and inflation was not a hassle.

I would love to have your views on using banknotes versus coins.

Thank you for reading.

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