Legal Tenders

[andyg]

Notes from Moderator:
This topic has been split off from http://www.worldofcoins.eu/forum/index.php/topic,43608.0.html
If any reference is needed please read the above topic.

Well, proof coins are not legal tenders, so by faking, no one will jeopardize the economy. The price at which these coins are being sold is not that much and the market is also not that big ( proof coins are not mobile phones). So why will the Chinese people take that much trouble of sending fake proof coins over the Himalayas?

These fakes are not to jeopardise the economy - but to sell to collectors.  They will cost a few Rupees to be made and the seller can make a profit selling them to unsuspecting collectors.

[EWC]

Well, proof coins are not legal tenders, so by faking, no one will jeopardize the economy. The price at which these coins are being sold is not that much and the market is also not that big ( proof coins are not mobile phones). So why will the Chinese people take that much trouble of sending fake proof coins over the Himalayas?

Your question seems to me to contain implicit premisses, thus :

A)   People are rational

B)  Chinese forgers are people

C)  It would not be rational to make fakes of the postulated type

Thus C) would contradict A)

I suggest you think further concerning this suggestion from Bertrand Russell:

“Man is a rational animal. So at least we have been told. Throughout a long life I have searched diligently for evidence in favour of this statement.
So far, I have not had the good fortune to come across it.”

Rob T

[Rabi_R]

Your question seems to me to contain implicit premisses, thus :

A)   People are rational

B)  Chinese forgers are people

C)  It would not be rational to make fakes of the postulated type

Thus C) would contradict A)

I suggest you think further concerning this suggestion from Bertrand Russell:

“Man is a rational animal. So at least we have been told. Throughout a long life I have searched diligently for evidence in favour of this statement.
So far, I have not had the good fortune to come across it.”

Rob T

I shall start my response with a 

Having said that, i suggest you to consider these facts -
1) Price i have paid for this coin is not more than the cost of a family pizza in my country
2) If you go through the sites of Indian mints, you will find coins released two years ago are still being sold. From this we can guess how big the market for proof coins is.

[kansal888]

Well, proof coins are not legal tenders, so by faking, no one will jeopardize the economy.

Dear Friends

In my opinion proof and unc coins issued by Indian mints are legal tenders.

1) These coins are issued under Coinage Act of India.

2) Each theme / subject is approved by Ministry of Finance at highest level before issuance (including designs, denomination, size and metal composition)

3) A Gazette Notification is issued for Proof/ Unc  coins by Govt of India.

4) Gazette Notification is laid in both the houses of Parliament - Lok Sabha as well as Rajya Sabha

Proof coins of India falls under what is popularly called as NCLT i.e. Non Circulating Legal Tenders

Regards
Sanjay Kansal

[Rabi_R]

Dear Friends

In my opinion proof and unc coins issued by Indian mints are legal tenders.

1) These coins are issued under Coinage Act of India.

2) Each theme / subject is approved by Ministry of Finance at highest level before issuance (including designs, denomination, size and metal composition)

3) A Gazette Notification is issued for Proof/ Unc  coins by Govt of India.

4) Gazette Notification is laid in both the houses of Parliament - Lok Sabha as well as Rajya Sabha

Proof coins of India falls under what is popularly called as NCLT i.e. Non Circulating Legal Tenders

Regards
Sanjay Kansal

1) Not all coins issued under Coinage Act are legal tenders, but coins issued only under specific sections are legal tenders.
2) A legal tender can have only one value, it's face value. This face value, in turn, is pegged to the US dollar. So if at the time of writing, rupee dollar exchange rate is 70:1, then a 10 rupees legal tender coin is worth 0.142 dollars, nothing more, nothing less.
Now if mints are asking me to pay 3000/- rupees for a 100 rupees proof coin, that cannot be legal tender.
If proof coins are legal tenders, price list in mint sites would have looked like currency rate boards.



Happy Gandhi Jayanti



P.S -  Admin/moderator may consider moving this to a new thread.

[quaziright]

I’ve been reading this thread with quite a bit of amusement. The OP is quite something in terms of reactions to all those who commented with what I can only assume was in the spirit of helping answer the original question. I don’t know specifics of Indian coins, but I was quite surprised by the claim in the post above that the INR is pegged to the dollar. Unlike the GCC, India manages a floated échange rate that’s not pegged to any one currency, though of course the US dollar along with the euro, pound sterling, CHF and other currencies would constitute a significant influencing factor.

As per wiki..
Officially, the Indian rupee has a market-determined exchange rate. However, the RBI trades actively in the USD/INR currency market to impact effective exchange rates. Thus, the currency regime in place for the Indian rupee with respect to the US dollar is a de facto controlled exchange rate. This is sometimes called a "managed float". Other rates (such as the EUR/INR and INR/JPY) have the volatility typical of floating exchange rates, and often create persistent arbitrage opportunities against the RBI.[54] Unlike China, successive administrations (through RBI, the central bank) have not followed a policy of pegging the INR to a specific foreign currency at a particular exchange rate. RBI intervention in currency markets is solely to ensure low volatility in exchange rates, and not to influence the rate (or direction) of the Indian rupee in relation to other currencies.[55
https://en.m.wikipedia.org/wiki/Indian_rupee

 It seems time and again the OP has got his facts wrong. Nevertheless, the thread is indeed turning out to be informative in terms of reading this laborious process of defining when a coin is or is not issued besides other tangential  topics

[Rabi_R]

Since this is an informal discussion going on in an online forum, the usage of the term "pegged" should have been construed in a more loose sense rather than the strict sense in which it has been. More so because, the common perception, world wide, since Bretton-Woods, is that USD is the new gold.

[Pabitra]

Unlike the GCC, India manages a floated échange rate that’s not pegged to any one currency, though of course the US dollar along with the euro, pound sterling, CHF and other currencies would constitute a significant influencing factor.

Wrong.
Pegging is like two sides of a coin.
In case of GCC ( specifically AED), it is Central Bank of Emirates which maintains the pegging. US Federal Bank does not play any role.
On the other hand, stronger currencies do maintain the peg with seemingly weak currencies.
There was a time after WW II, when Federal Bank maintained the pegging of Japanese Yen, as a part of commitment made after Allied Victory.
Similarly, France agreed to maintain the peg for West African States Franc as well as Central African States Franc, to maintain the integrity of the monetary unions.

Now coming to specific INR. India maintains pegging of Rupee with Bhutan Ngultrum at 1:1 as well as with Nepal Rupee at 100:160.

[dheer]

1) Not all coins issued under Coinage Act are legal tenders, but coins issued only under specific sections are legal tenders.
2) A legal tender can have only one value, it's face value. This face value, in turn, is pegged to the US dollar. So if at the time of writing, rupee dollar exchange rate is 70:1, then a 10 rupees legal tender coin is worth 0.142 dollars, nothing more, nothing less.
Now if mints are asking me to pay 3000/- rupees for a 100 rupees proof coin, that cannot be legal tender.
If proof coins are legal tenders, price list in mint sites would have looked like currency rate boards.



Happy Gandhi Jayanti



P.S -  Admin/moderator may consider moving this to a new thread.

1. Can you quote the section from coinage act.
2. INR like most currencies is a fiat. Exchange rate is different, it can be pegged, regulated or market driven.

[Rabi_R]

"The coins issued under the authority of section 4 shall be a legal tender in payment or
on account...."

PDF of Coinage Act is available online. You may go through the entire act.

[dheer]

"The coins issued under the authority of section 4 shall be a legal tender in payment or
on account...."

PDF of Coinage Act is available online. You may go through the entire act.

In my view you are misreading the section 6. It is only giving out the limit as to when I can give coins. i.e. if I have to pay someone Rs 10,000/- I can't force him 20,000 coins of 50 paise.

Section 4 clearly says coins can be minted upto the denomination of Rs 1000. It does not distinguish between Circulating Legal Tender and Non Circulating Legal Tender.

[EWC]

Since this is an informal discussion going on in an online forum, the usage of the term "pegged" should have been construed in a more loose sense rather than the strict sense in which it has been. More so because, the common perception, world wide, since Bretton-Woods, is that USD is the new gold.

Loosely speaking - I agree.

But I think the important thing to bear in mind that precious metal probably started to became prominent as a money form before 2,800 BC, and ceased, rather exactly in the UK I would claim, in 1947.

Thus the current experiment is hardly any older than I am! 

On the specific matters of NCLT  etc - perhaps this is of interest? 

(Its widely assumed the Japanese gvt settled out of court.  But - what do I know?    )

https://taxfreegold.co.uk/japanchrysanthemumcoinsaffair.html

Rob T

[Rabi_R]

In my view you are misreading the section 6. [/url].

I am not reading Section 6 at all. I am reading Section 4 and that Section has enough clue. The Act doesn't attempt to differentiate Legal Tender and Non Circulating Legal Tender because NCLT is a misnomer. A legal tender is currency that must be accepted if offered in payment of debt. So what is NCLT? Married bachelor?

[dheer]

The text you have pasted is from section 6,

QUOTE
1) The coins issued under the authority of section 4 shall be a legal tender in payment or on account, in case of--
(a) a coin of any denomination not lower than one rupee, for any sum not exceeding one thousand rupees;

UNQUOTE
It is not to be read as coins issued under section 4 are legal and coins issued under other are not.
It means that coins can only be used to repay a debt of rs 1000.

[quaziright]

Wrong.
Pegging is like two sides of a coin.
In case of GCC ( specifically AED), it is Central Bank of Emirates which maintains the pegging. US Federal Bank does not play any role.
On the other hand, stronger currencies do maintain the peg with seemingly weak currencies.
There was a time after WW II, when Federal Bank maintained the pegging of Japanese Yen, as a part of commitment made after Allied Victory.
Similarly, France agreed to maintain the peg for West African States Franc as well as Central African States Franc, to maintain the integrity of the monetary unions.

Now coming to specific INR. India maintains pegging of Rupee with Bhutan Ngultrum at 1:1 as well as with Nepal Rupee at 100:160.

Wow, I suppose a coin collector doesn’t really need a basic grasp of economics to be in this hobby. So here’s a link which can be useful for you explaining why countries peg their currencies to the dollar and the mechanics of how they do it.
https://www.thebalance.com/what-is-a-peg-to-the-dollar-3305925

Here’s a newspaper article that talks about the Nepalese Peg
https://www.bestcurrentaffairs.com/nepal-pegged-currency-indian-rupee/

The French West African and Japanese examples are exceptional circumstances. In both cases, it was/is foreign governments directing the monetary policy of countries that they occupied or formerly controlled. The discussion here is about sovereign countries who maintain independent monetary authority but may voluntarily choose to pegg their currency to a global currency like the Dollar.