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Options Embedded in Physical Money


Espen Gaarder Haug


affiliation not provided to SSRN

John Stevenson


affiliation not provided to SSRN
December 9, 2008


Abstract:     
Embedded options in the worlds physical monies, both coin and paper, are introduced. The option value for base metal coins is presented. The various strategies for redemption by the owner and the prevention of redemption by the issuer (central banks) are discussed. The market values of gold coins are discussed in light of the embedded option valuation. In conclusion, the rational behavior of both individuals and central banks in light of these valuations is described.

Keywords: Coins, bills, paper money, gold and silver coins, central

JEL Classification: E41, E52, E58, G12, G13

working papers series


Date posted: December 9, 2008 ; Last revised: March 24, 2009

Suggested Citation

Haug, Espen Gaarder and Stevenson, John, Options Embedded in Physical Money (December 9, 2008). Available at SSRN: http://ssrn.com/abstract=1313665

Contact Information

Espen Gaarder Haug (Contact Author)
affiliation not provided to SSRN ( email )
John Stevenson
affiliation not provided to SSRN
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