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100 Percent Reserve Money: The Small Change Challenge

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Tags Money and Banking

07/30/2014George A. Selgin

Volume 12, No. 1 (2009)

 

In a free market economy from which fiduciary media are excluded, economic progress will be limited, perhaps severely, by the high cost and correspondingly limited supply of small-denomination money—money that is needed to accomplish retail and other low-value exchanges. Historically, fiduciary token coins have proven to be the only practical means for addressing the small change problem, whether officially or unofficially. In partic-ular, privately-supplied, fiduciary token coins played a crucial part in Great Britain’s Industrial Revolution, which might not have been possible without them.

 

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Selgin, George. "100 Percent Reserve Money: The Small Change Challenge." The Quarterly Journal of Austrian Economics 12, No. 1 (2009): 3-16.