monetary system

The Evolution of the Money System

Ancient Monetary Systems

Throughout history, in every nation, there have been money systems and economic systems. They changed from time to time, and so, they are attributed to various ancient economic theories. A standard method to measure the value of money is the use of precious metals, such as gold and silver, or coins made of those metals. These are common types of monetary systems. Some countries in Europe use them. Others in Asia and elsewhere use other types of money. Some believe that the Industrial Revolution and the emergence of modern banking made money more popular, with money being an expression of the people's power, and money being a powerful instrument of exchange. Today, there are so many types of money systems.

China's Monetary System

China's money supply has been highly volatile, with rates varying by 8 percent a month during much of the last decade, according to the World Bank. The system's stability to the outside world, however, has been another matter. There have been increasing concerns about a sharp rise in debt levels at state-controlled companies. China's monetary-system history The Chinese government issued its first banknotes in the early days of the country's industrialization. The amount of money circulating in the system was small at first, about $600 million, but the rapidly rising industrialization made this difficult to manage.

The Roman Monetary System

A very efficient system that lasted many years, the Roman monetary system is widely considered the world's first stable modern fiat monetary system. During the reign of the Roman emperor Augustus, a widely accepted monetary unit called the denarius was adopted as the main circulating currency. The majority of the currency was carried by state slaves as payment for services. The emperor also issued small denominations called denarii, with their value tied to the tax that the slave would have to pay. The slaves could then redeem the denarii for their own freedom. The Roman economy and monetary system were highly centralized. The dollar-denarii is an official representation of the denarius unit, valued at 1/10,000 of a pound of fine silver or 18 grams of gold.

The Renaissance

In the 1300s, monetary systems in Europe were basically barter systems. 1400s – European exploration expanded to reach Asia and Australia and the new discoveries proved to be very profitable for Europe. During this period, the gold and silver payment system of Europe began to decline. The price of silver began to increase and the price of gold began to drop. This led to the use of more and more precious metals in place of gold. 1760 – The gold standard of Europe was introduced, with the ratio of silver to gold being set at an exact ratio. The objective of this system was to conserve precious metal resources by limiting the gold to silver ratio.

The Industrial Revolution

The Industrial Revolution is a period in the history of the western world beginning in the mid-18th century and ending in the mid-19th century that saw an enormous industrialisation of Britain and other Western countries. These developments, caused by the invention of new technologies, made possible the mass production of a wide range of goods and services, such as cotton textiles, steel, electrical machinery and soap. The Wealth of Nations The Wealth of Nations is an essay written by Adam Smith, an English economist, philosopher and political economist. It is one of the most important treatises ever written on economics. Smith's essay consists of three parts. Part one contains a description of the complex and seemingly arbitrary nature of money and the nature of its circulation.