circulating denominations (part 4)

… and wallet distributions.

This is part of the Toronto visit series.

“Do you have change for $5?”
“I can only give you one loonie and two lizes”
Dumps coins on counter.

(Canada has no bills under $5 and circulates the $1 and $2 coins.)

Before playing with Canadian money, I had thought that a $2 denomination, whether coin or bill, would be a great idea. But the problem I encountered here was that I was just unable to get very many $1 coins when the $2 coin was also widely circulating. This makes sense, because each transaction at most ends up giving you one additional $1 coin if done optimally. But if you had to always pay odd dollar-amount fees like the $3 streetcar fares, then you need many $1 coins which you don’t have. Compare this to the US system, where you get lots of $1 bills from daily transactions — up to four $1 bills in a transaction ($0-$4 in change). It surprised me that the latter situation is more flexible, because I did not take into account the dynamic effects that repeated transactions have.
(Read the article)