Trillion Dollar Coin

AAA

DEFINITION of 'Trillion Dollar Coin'

A trillion dollar coin is a theoretical coin that could be legally minted because of a United States law that allows the Treasury to produce platinum coins of any denomination. The concept of creating this platinum coin first came about in 2011 in an effort to solve the issue of the debt crisis in the U.S.

INVESTOPEDIA EXPLAINS 'Trillion Dollar Coin'

Although there are statutory limits regarding how much paper money can be in circulation at any particular time, as well as rules regarding gold, silver and copper coinage, the U.S. Treasury does have the authority to print coins of any denomination provided they are made with platinum. And unlike the limits on paper money circulation, there are no limits on the amount of coinage that can be in circulation at any one time. Specified in Title 31 (Money and Finance) of the United States Code (see above), the law was intended to allow for the minting of collectors' coins in various sizes. Because of this "loophole," some have cited that the trillion dollar coin could serve as a viable option to avoid the U.S. debt ceiling.


The theory behind a trillion dollar coin is as follows:


1. The U.S. Mint could make several trillion dollar platinum coins.


2. The president could order the coins to be deposited at the Federal Reserve.


3. The Federal Reserve could put the coins in the Treasury.


4. The Treasury could use the money to pay off some of the nation's debt.


Shortly after the trillion dollar coin was brought up in early 2013 as an option to avoid U.S. default, opponents made plans to introduce a bill that would block the Treasury from minting such coins.

RELATED TERMS
  1. Debt Ceiling

    The maximum amount of monies the United States can borrow. The ...
  2. Currency In Circulation

    Currency that is physically used to conduct transactions between ...
  3. Currency

    A generally accepted form of money, including coins and paper ...
  4. Money

    An officially-issued legal tender generally consisting of currency ...
  5. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
  6. G.19 Report

    A monthly statistical report from the U.S. Federal Reserve that ...
RELATED FAQS
  1. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  2. What are the differences between the Federal Funds Rate and LIBOR?

    In macroeconomics, the interest rate plays a crucial role in delivering an equilibrium on the assets market by equating the ... Read Full Answer >>
  3. What is the correlation between inflation and interest rate risk?

    There is a positive correlation between inflation and interest rate risk. Inflation basically occurs when there is too much ... Read Full Answer >>
  4. Which nations' economies have reserve ratios?

    Most developed economies require a reserve ratio for their banks and other depository institutions, though there are some ... Read Full Answer >>
  5. What is the primary use of reverse repurchase agreements?

    The Federal Reserve utilizes a reverse repurchase agreement as one of two instruments used for the primary purpose of offsetting ... Read Full Answer >>
  6. Why would the Federal Reserve change the reserve ratio?

    The Federal Reserve would change the reserve ratio if it wanted to use that part of its monetary policy to either expand ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    How Countries Deal With Debt

    For many emerging economies, issuing sovereign debt is the only way to raise funds, but things can go sour quickly.
  2. Economics

    Debt Monetization: A Nearsighted Government Policy?

    We look at whether this financial practice benefits a government in the long term.
  3. Bonds & Fixed Income

    The Risks Of Sovereign Bonds

    Sovereign debt can play an important role in providing international diversification to individual investors.
  4. Personal Finance

    Investing In Emerging Market Debt

    This asset class has left much of its unstable past behind. Find out how to invest in it.
  5. Personal Finance

    Are Markets Ready For An Interest Rate Hike?

    Despite financial market fears over the uncertainty of Greece’s debt crisis and the recent drop in China’s stock-market, Federal Reserve Chairwoman Janet Yellen has reaffirmed the Fed’s plans ...
  6. Home & Auto

    How the Fed Affects Reverse Mortgages

    An in depth look at how the Federal Reserve affects reverse mortgages.
  7. Economics

    Signs The U.S. Recovery Is Solid

    Many market observers lately have been making some pretty pessimistic evaluations of the U.S. economy, declaring that it’s stagnating and soft.
  8. Economics

    Regional Banks Give The Fed A National Perspective

    We all know that the Federal Reserve utilizes monetary policy to control the economy, but what do the 12 regional Federal Reserve Banks do?
  9. Fundamental Analysis

    Spectator Vs. Speculator: Two Market Approaches

    Spectators and speculators rely on different mechanisms to identify and profit from market opportunities.
  10. Markets

    Rising Interest Rates: Who it Helps, Who it Hurts

    When interest rates rise, the impact hits some of us differently. Here's why.

You May Also Like

Hot Definitions
  1. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  2. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  4. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  5. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  6. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!