The Rise and Demise of Coins? Pffft.

An excellent book on the history of coins was launched in Canberra in August last year. It took me a while to acquire it, but I'm pleased I did. It covers the history of mankind's use of coinage in a focused and insightful way - more than a hundred different coins are highlighted to depict the evolution of coinage.

I was familiar with a number of the coins that were selected; many others were new to me.

As much as I enjoyed reading and (re-reading) about them,  I couldn't help but disagree with the book's subtitle, that coins are suffering a complete demise.

To be fair to the author, he doesn't actually state that coins will suffer a complete demise, simply that "It is safe to predict that sometime in our century coins will cease to circulate as currency." After reading that statement, someone who isn't a complete wonk in economic theory might think that if coins won't be used as currency any more, there's no other job for them, so they're irrelevant.

The trouble is, coins (or at least money) serve more than one role - they have more than one job. I have a hypothesis about this - coins are not suffering a complete demise, but the role they're serving is changing. Here's why.

My Hypothesis - Coins Are Not Suffering A Demise, The Role They're Serving Is Changing

Way back when the Athenian tetradrachm was the world's prime trade coin, Aristotle himself explained that money serves 3 uses:

It acts as a medium of exchange - it "circulates as currency" or is used in day-to-day business;
It acts as a measure of value - it's a common unit that goods and services can be priced in; and
It acts as a store of value - wealth can be held over time in it.

To be fair in this argument that the role of coins is changing, Aristotle didn't explicitly mention coins in his discussion defining the functions of money. That said, he didn't have the luxury of being confused in the distinction between coinage and money, because coins were money at that time.

Locke, Jevons, Smith, Marx or Law all lived in an era where paper currency (and other financial instruments) operated alongside physical coinage as money, and while they debated robustly about which form of money suited which function best, they didn't exclude coins from discussion outright.

The reality of the 21st century is staring us in the face - as a proportion of all payments made for in-person transactions, RBA data is showing that cash has declined from being used in 69% of all transactions in 2007 to just 13% in 2002. 13%! Keep in mind that "cash" is regarded as coins and notes, so this isn't just an indictment on coins, but on notes also.

So even a dogmatic numismatist such as myself has to see this as unequivocal change in the way human beings exchange with each other. In 2026, most of us are quite comfortable regarding money as an abstract concept we see embodied as numbers on a statement rather than as physical objects.

The author of Heads and Tales was clearly moved by statistics such as these to at least write something of an obituary for the main role coins have played for the last several thousand years. The book is described as "... a valedictory survey. It follows the story of coins from conception through substance to shadow. Presenting on average a tale for each generation since the beginning, it celebrates the rise and chronicles the demise of a remarkable invention."

The book has been superbly produced - the reproduction of the images is excellent, the print quality is excellent, and the graphic design is superb also. The text covering each featured coin is evocative enough that I could read a few each night before bed and keep myself educated and entertained for several years.

My own experience tells me that while cash (and by extension, coins) are being used less and less, there is much evidence they are now being used far more often as a store of value than ever before.

I spent several hours wading through the annual reports of the Royal Australian Mint and came up with two tables of statistics - the number of coins struck for circulation each year and the dollar value of the numismatic items sold by the Royal Australian Mint each year. Put both of them side by side, and we can plainly see why my gut tells me that coins are not going to be suffering a demise any time soon.

As the graphs here show, while the Royal Australian Mint struck 333 million for circulation in 2001 to and just 47 million in 2023 ( a fall of around 86%!), sales of their numismatic products rose from $18.9 million in 2001 to $87.7 million in 2023 (a rise of around 363%!). Looking at the trend line in both of those graphs, we can see they're clearly moving in different directions.

These are of course just two points of data, but I believe they show an underlying trend - at the Royal Australian Mint at least, more coins are being produced for use as a store of value than they are as a medium of exchange. There will be other statistics that could confirm that coins are more often being used as a store of value than they are as a medium of exchange - the % of individuals who identify as coin collectors; as well as the average size and value of those coin collections

What I find intriguing about this is that consumers are driving a reduction in demand for one product, yet are driving an increase in demand for a different product, even though both of those products can be classified as coins!

We can see that one form of coin is being called for less and less, while there's an increasing appetite for a different type of coin. To the degree that the staff of the Royal Australian Mint invent and market new coin products that meet that demand, we can expect to see the graph showing numismatic sales to continue to diverge from that showing production of circulating coinage. While the production of circulating coins can only decline so far as zero, I wonder what the limit to the growth in numismatic sales is?