Coins and bank notes are known as currency. Compared to other means of payment such as checks, currency represents only a very small portion of money supply. Currency is a liability of the Federal Reserve Banks because the token value it represents (see below).
|Currency is used to make small payments. For instance, for the purchase of groceries, gasoline or newspapers. It would be indeed inconvenient to write a check for small amounts. But all the large payments are completed with the help of checks. It would be unsafe and time consuming to purchase furniture, appliances or an automobile by paying with bank notes.|