The Susan B. Anthony dollar and the theory of coin/note substitutions.

From: Journal of Money, Credit & Banking | Date: August 1, 1994| Author: Caskey, John P.; St. Laurent, Simon | Copyright information

This paper analyzes governments' attempts to replace circulating notes with coins. It argues that because of 'network' externalities in currency systems, a government cannot simply offer a new coin, such as the Susan B. Anthony dollar, to the public and expect it to circulate, even when the coin/note substitution would benefit the economy. For such a substitution to succeed, a government may need to provide an incentive for a large block of the economy to initiate the conversion or, alternati...

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