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Denomination is a proper description of acurrency amount, usually forcoins orbanknotes. Denominations may also be used with other means of payment such asgift cards. For example,five euros is the denomination of afive-euro note.
In a currency, there is usually a main unit (base) and a subunit that is afraction of the main unit. In some countries, there are multiple levels of subunits. In the formerOttoman Empire, 1 lira = 100 [kuruş] = 4000 para = 12000 [akçe]. Today, only a few places have more than one subunit, notably theJordanian dinar is divided into 10 dirham, 100 qirsh/piastres, or 1000 fils. Many countries whereWestern European languages are spoken currently have their main units divided into 100 subunits. Some currencies that previously had subunits no longer do, becauseinflation has rendered the subunit useless. A prominent example is theJapanese yen, which was formerly divided into 100 sen or 1000 rin. Both subunits were demonetized at the end of 1953.[1]
Occasionally, a super unit is used as a multiple of the main unit. Examples includeKorean won = 5yang in 1893,Iranian toman = 10rials (used informally today). In theOttoman Empire, lira and kuruş were super units at some point before becoming the main unit.
In the Indian subcontinent, it is common inHindustani, as well as in bothIndian andPakistani English for large amounts of money to be discussed inlakhs andcrores rather than in rupees. While they are not official denominations, they are drawn from the customarynumerical system and are widely understood and utilised in the Indian, Pakistani, and Nepalese financial systems.
Adecimal currency is a currency where the ratio between the main unit and the subunit is an integralpower of 10.Non-decimal currencies are now rare but had some advantages in daily life transactions. For example, 1South German Gulden = 60Kreuzer. 60 can be divided into 2, 3, 4, 5, 6, 10, 12, 15, 20 or 30 parts that are stillintegers, making pricing easy. This advantage (in an age without mechanical or electronic calculators) and the lack of widespread accurate weighing apparatus (meaning an item might sometimes simply be divided in 2, 4, 5 etc.) coupled with tradition were the reasons why non-decimal currencies were used.
In theory, two countries currently use non-decimal currency: Mauritania (1 ouguiya = 5 khoums) and Madagascar (1ariary = 5 iraimbilanja). In practice, however, the value of the main unit in each case is so low (less than 1/1000 of a United States dollar) that the sub-unit is not of any practical use and is rarely seen in circulation. In the case of the iraimbilanja, this is a carryover of the Madagascar's previous currency, the Malagasy franc, which had the ariary as a super unit worth 5 francs, and iraimbilanja was an alternate term for the franc. The last major countries to use non-decimal currencies in practice were the United Kingdom (until 1971), Ireland (1971), Malta (1972) and Nigeria (1973).
The "optimal denomination problem"[2] is a problem for people who design entirely new currencies: What denominations should be chosen for the coins to minimize the average effort required tochange into smaller denominations. As of 2014, most decimal currencies use a1-2-5 series of coins, but some other set of denominations would require fewer denominations of coins or a smaller average number of coins to make change or both.[citation needed] Denominations of 3, 15 or 25 units are also in existence, or have been until recently.[citation needed]
Historicaly, the denomination was not displayed on coins, although names of coins (such as drachma,as, sestertius etc.) were used in both colloquial and official language. It was only in the 1600s that Scandinavian coins began to display relative value on the smaller units (8, 16 skilling etc.) because there were many of them in circulation.
The monetary reform ofPeter the Great in the Russian Empire not only established a strictly decimal monetary system (which was rather uncommon in other states at that time) but made the display of denomination (the "face value") mandatory on all coins. By the end of the 18th century, denomination appeared on most coins in Europe and the Ottoman Empire, and in the 19th century it became a common practice.
By the end of the 20th century, coins were mostly distinguished from medals or tokens by presence of denomination, either in monetary units or (for commemorative or bullion coins only) in the weight of a valuable metal. Exceptions are quite rare: for example, British commemorative crowns (initially with the value of 5 shillings, then 25 pence in decimal currency until the 1900s when it was established as 5 Pounds Sterling) traditionally do not display any face value, and are only recognized as such due to their typical size.[clarification needed]
It is common to name a unit with aunit of weight, such aspound,lira,shekel, andbaht. In most cases, these currencies were originally defined as that amount of someprecious metal. Another choice of name is some form of derivative of the political entity. TheAfghan afghani and Europeaneuro fall into this category. Sometimes the name is simply the name of the metal of which the coins were or are made, such asPolish złoty ("golden") andVietnamese đồng ("copper"), or its geographical origin, e.g. Joachimsthaler (seeDollar).
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