By Franklin Noll

The future of money is fast approaching . We hear much about Bitcoin , central bank digital currencies , stablecoins , cryptocurrency and digital money . Proponents of this brave new monetary world see it as unprecedented and revolutionary . However , few realize how much it is informed and shaped by the past . Monetary history , stretching back close to 200 years , is currently propelling and constraining the development of alternative currencies . The weight of our monetary past will only be felt more in the future .

In some cases , our monetary past seems to be repeating . In other cases , the past is limiting innovation . The examples are numerous . But , it may be useful to review some of them not only to better understand the past but also to understand the often confusing world of cryptocurrency .

This article will focus on two types of cryptocurrencies : stablecoins and central bank digital currencies . A stablecoin is a cryptocurrency which , as the name suggests , seeks to maintain a stable value . It is usually tied to an existing fiat currency such as the dollar , pound or euro . A central bank digital currency ( CBDC ) is a cryptocurrency or other digital currency issued by a nation ’ s central bank . It is not an electronic token of a country ’ s fiat currency , but a separate form of currency that is a claim on the central bank .

Parallels to such modern currencies seem rather abundant in early 19th-century America . This would seem a good place to start an exploration of how the monetary past is affecting the monetary future . Indeed , the early 19th century saw a decentralized currency system that accommodated a myriad of currencies that had different values and purposes . At the time , the money of the United States consisted of coins produced by the US Mint , diverse foreign coins and bank notes issued by private banks . This situation created numerous problems .

32 FINANCIAL HISTORY | Summer 2021 | www . MoAF . org