Appendix 2
HONG KONG COINAGE
This paper is in two parts. The first deals in a gener:l way with choices of denominations, metals and sizes, shapes and colours and gives an indication of the relative cost of coins over a wide range. The second part deals specifically with the Hong Kong coinage and suggests possible ways in which the costs of manufacture and metals might be reduced.
PART I COINAGE SYSTEMS GENERAL
Introduction
2.
The basic criterion that governs specification is nowadays that of least cost consistent with acceptable appearance, security against counterfeiting and adequate distinguishability between denominations. Judgements about appearance must take into account what the public is used to and they may also be influenced by considerations of prestige and of the country's image as conveyed by the coinage. Distinguishability may have to be achieved not only between the new coins themselves but also between them and any existing coins, and the distinctions should be clear to the touch end to the eye as well as the mechanisms of coin sorting and vending machines. This combination of factors means that the choice of specification is usually severely limited. In contrast the choice is generally not very greatly influenced by the need for security against counterfeiting; high standards of manufacture tre the best safeguard as these are difficult for the counterfeiter to
achieve or simulate.
3.
Comparisons of cost naturally have to take into account the effective life of the proposed coins as well as their initial cost, and costs overall may well be affected as much by choice of denominations as by the choice of metals and sizes. The possibility of inflation may also be an important factor, especially if there is a risk that coins might be melted down as a cheap source of metal.
Choice of Denominations
4. The sequence of denominations that would enable all transactions to be conducted with the use of fewest coins (or notes) would be one in which each denomination was twice the value of the one preceding it, i.c.:
1; 2; 4 8 ; 16 ; 32 ; etc.
Such a sequence is obviously unsuitable for a decimal coinage, but a close approximation to it is:-
1; 2; 5; 10; 20 (or 25); 50; 100 ; etc.
Most existing currencies contein denominations in this sequence though the '2' is frequently omitted. 20 and 25 unit coins are about equally common. Attempts hove sometimes been made to meet demand for 1 unit coins by the introduction of a 3 unit