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How much is a £20 coin worth?
19th November 2013
That’s an odd question. A £20 coin is ‘worth’ £20, isn’t it? Surely that’s the whole idea? I know from experience that one of the hardest jobs of an economics teacher is to communicate the idea of token money. Stated simply, most modern money is worthless. It’s just monopoly money. Several of you will already be puzzled by that statement.A new £20 coin is being issued, and apparently the Bank of England is having considerable difficulty persuading people that it’s really ‘worth’ £20.Here’s the story, and several other links to that strange concept: money.
Firstly, just a quick explanation of what I mean by ‘monopoly’ money. I have a prized collection of Zimbabwean banknotes, ranging right up to a 100 trillion dollar note. Students always ask me what they are worth. When I say “nothing” they are either downcast or disbelieving. “But it’s MONEY Sir! Look!” Then I hold up some Monopoly money and I point out that they are fundamentally both the same – pieces of paper. Next I hold up a UK £5 note to make the same point. The UK is not poor because of a shortage of money. We can have any amount of it.
There’s a lot of resistance to my money lesson, so perhaps I need to change it and talk about the £20 coin on its way - but expert says it's only worth £8. This might be a better way to communicate the idea of money. It’s about trust in its value. A £5 note is worth £5 if you think it is, and other people share that belief (or illusion, if you prefer).
I wonder how the Bank of England is able to maintain the illusion of the value of paper and electronic money but struggles to do the same thing with coins. At least coins have some kind of intrinsic value, in terms of the metals they are made from.
Here are a few of my links of this topic:
What Is Money – video clip with Robert Peston
Britain's £1m and £100m banknotes
Scottish banknotes: should shops accept them?
S Korea ready to hang up on cash