Monetary cone, why coin collectors are interested
The monetary cone is a relatively simple concept, but very important if you are an economist or intend to enter the world of coin collecting. When you finish reading this article you will see why this statement is correct.
In many notes or economic news you will find that the famous monetary cone is mentioned, but rarely defined. For economists it is a simple concept, almost common sense, but not so for the rest of the people.
In this article we will review the definition of the monetary cone, and why you should know it if you collect coins. We close with an example that we are sure you will like.
What is a monetary cone?
The monetary cone is defined as the set of coins and banknotes existing and circulating in a country simultaneously. It is usually organized in ascending or descending order, from the lowest denomination piece of currency to the highest.
The concept of monetary cone is composed of two words. On the term “monetary” I think there is no doubt, it refers to money. The term “cone”, on the other hand, is a metaphor that allows us to have a three-dimensional representation of the set of banknotes.
I do not want to go into geometric technicalities, so I will limit myself to say that the cone is a geometric figure composed of the base, and another lateral surface that ends in a tip. It looks like this:
Many people wonder why it is a monetary cone, and not a monetary pyramid, or a monetary triangle.
In Colemone Francisco J. López says that the concept could be because it is usual for different bills and coins of the same denomination to circulate. This would supposedly give it the three-dimensional character, making a cone. This does not make much sense, because the pieces can be placed side by side, in a two-dimensional matrix.
The reality is that I have not found a definitive answer as to why it is called a monetary cone. I assume it is an arbitrary term, used and accepted by social convention. Someone called it that, and the name stuck forever.
Why is the concept of Currency Cone important in numismatics?
The concept of monetary cone is important in numismatics because it describes the set of pieces of money that we can gather and study organized according to a geographical and temporal criterion.
Currency cones are not immutable. They expand when new banknotes or new denominations are introduced. They contract when these are eliminated.
They can also be replaced by another set of bills and coins when complete changes are made to the circulating money.
I know that normally when we speak of monetary cone we think of denominations, rather than specific bills and coins. However, in my opinion, when a coin is minted one year with a particular, commemorative design, when it is put into circulation along with the standard design it is expanding the monetary cone.
So, if you decide to collect coins or banknotes of a specific country and a specific era, it is in your best interest to know the monetary cone in all its magnitude. Questions such as:
- In what year was this cone enabled, and until when did it circulate?
- How many monetary pieces make up the cone?
- Are any of the coins or banknotes difficult to obtain?
- Is there more than one design for banknotes or coins of the same denomination?
These are just some of the questions a collector may have about a monetary cone. That is why it is so important to master the concept and, above all, to research the sets being collected.
Example of a monetary cone
Now that you are clear on what a monetary cone is, ideally we should review a concrete example where we can see it displayed graphically. Most of the examples on the Internet analyze Venezuela, because in a short time they have had several monetary cones.
Let’s go another way. Let us analyze the monetary cone of the US dollar.
The dollar, as a system, has a structure based on decimal values that have their point of reference in the unit, or rather in the dollar.
From here we have both 1 dollar bill and 1 dollar coin. As fractional units we have the half dollar, quarter dollar, dime, half dime and the cent. Upwards we have 2, 5, 10, 20, 50 and 100 dollar bills. Now they are no longer produced, but there were coins of half cents, 2 cents and 3 cents; as well as bills of 500 dollars, 1000 dollars, 5000 dollars and 10 thousand dollars.
NOTE: Here we would have an example of a monetary cone that contracts when denominations are taken out of circulation.
Then, the monetary cone of the dollar would look like this:
To get a complete picture I took the license to add the denominations of coins and banknotes that are no longer in circulation.
I hope this article has been to your liking. Now you know what a monetary cone is, and why it is a relevant concept for coin collectors.
If you found what you read interesting, share it on your social networks, surely other people will also enjoy learning about numismatics as much as you do. Leave me a comment below with your opinions, questions or topic suggestions. See you in the next article.