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<p>[QUOTE=&quot;Tejas, post: 4597959, member: 84905&quot;]…. It may be interesting to note that the numismatic term “coin” actually covers different economic concepts of money. Money is the medium of exchange. In ancient times, gold and silver was money, or we may call it <b>money proper</b>. Payments in money proper could be made in coin or bullion. Any payment in gold and silver was final. It extinguished the debt and entailed <b>no redemption risk</b>.</p><p><br /></p><p>Coins made of copper and bronze alloys were not money proper, but <b>money substitutes</b>. Such money substitutes (token money or fiat money) circulated in place of gold and silver where the latter was too valuable for the transaction. Acceptance of such money substitutes depended on the expectation that it is redeemable in gold and silver (i.e. the money proper) at face value and hence entailed <b>redemption risk</b>.</p><p><br /></p><p>In the Roman Empire, silver coins were frequently subject to debasement. I.e. they shifted from being money proper to money substitutes. When too much money substitutes circulated, people doubted that they were redeemable in money proper. Redemption risk materialized. Holders of money substitutes tried to redeem their money substitutes in gold, silver and other real goods at sharply rising prices. The result was hyperinflation and currency reform.[/QUOTE]</p><p><br /></p>

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