Gresham's Law


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In economics , Gresham's law is a monetary principle stating that "bad money drives out good". For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value , the more valuable commodity will gradually disappear from circulation. [1] [2]

Gresham's law is a monetary principle stating that "bad money drives out good." In currency valuation , Gresham's law was originally based on the observation that if a new coin ("bad money") is assigned the same face value as an older coin containing a higher amount of precious metal ("good money"), then the new coin will be used in circulation while the old coin will be hoarded and disappear from circulation.



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