What is the Difference between “Standard Coin” and “Token Coin”

The Differences between “Standard Coin” and “Token Coin” are as follows:

Standard Coin:

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1. It is the principal coin of a nation.

2. It is a full-bodied coin. Its face-value is equal to its intrinsic value.

3. Standard coins are made of gold or silver of a well-defined weight, purity and fineness.


4. Standard coins enjoy free-coinage as the mind is open for the public for getting their precious metals minted into standard coins.

5. Standard coins possess the status of unlimited legal tender, i.e. no one can refuse to accept value if paid in standard coins in any quantity.

6. Standard coins posses following merits:

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i. They inspire higher confidence in the holder,

ii. They provide an excellent means of storing purchasing power,

iii. There is no fear of inflation,

iv. They posses easy acceptability abroad.


7. Standard coins posses following demerits:

i. They are non-economical as they cost the same as their market value.

ii. They are less elastic in their supply which is always limited tot he stock of precious metal,

iii. They cause wastage of precious metal.

Token Coin:

1. It is the subsidiary coin of a nation.

2. It is not full-bodied coin. The intrinsic value is less than its face-value.

3. Token coins are made of inferior metals such as nickel, copper, aluminium, etc.

4. Token coins don’t possess the attrebute of free-coinage. Public can’t get the metals converted into coins.

5. Token coins don’t possess this status. They are only limited legal tender, i.e., no one can be compelled to accept them beyond a certain limit. Lower denomination coains (such as those of Rs. 1, Rs. 2 and Rs. 5) in India can’t be forced on recipients beyond a fixed proportion of the total payment.

6. Token coins posses following merits:

i. Token coins are economical as they cost less than their market value,

ii. Token coins are highly elastic as the metal used in their production is cheaper and lighter.

7. Token coins posses following demerits:

i. Token coins inspire less confidence in the holder,

ii. Fear of inflation is always there,

iii. Token coins are unsuitable for storing wealth,

iv. They are suitable only for smaller transactions,

v. Token coins are not acceptable abroad.


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