That sounds like a benefit for paper rather than coins.Surlethe wrote:It seems that paper allows the government to decrease the money supply (and so increase the value of the dollar) by stopping the dollar presses more quickly than they could by stopping the coin presses, but that increased flexibility is the only benefit I can see to the replacement of paper by coins.
But governments generally do not adjust the value of their currency by increasing or decreasing the printing of bills and/or the minting coins. While it could be done that way, there are more effective methods. Countries with fixed exchange rates manipulate the value of their currency by directly buying and selling it in the currency markets (which is why they need to maintain large reserves of foreign currency). Countries with floating exchange rates (such as Canada) adjust their domestic monetary policy to exert pressure on the currency markets.