Credit money and the rise of banking, central banking, and public money

L. Randall Wray ()

Chapter 3 in Understanding Modern Money Theory, 2025, pp 34-65 from Edward Elgar Publishing

Abstract: This chapter traces the history of money from the pre-modern age to the beginnings of the modern banking system created in England between the 17th and 19th centuries. The key development was the integration of the private banking giro (payment community) and the state's giro under the Bank of England, which became the country's central bank. The modern monetary system is based on a state fiat currency, but paradoxically England emerged with the most advanced financial system while maintaining a rigid link of the pound to precious metal from 1560 to WWII. That link, along with the development of parliamentary democracy, generated the trust that gave the state and its central bank the power to rise to the top of the monetary pyramid. At the same time, it integrated private money and debt with public money and debt, promoting a financial system that supports the development of the modern capitalist system.

Keywords: Development of the modern monetary system; Origin of central bank; Money pyramid; Public and private giro; Payment community; Public and private debt (search for similar items in EconPapers)
Date: 2025
ISBN: 9781800375147
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