Historical Turning Points in the Composition of the Money Supply

The modern money supply has experienced several turning points. Broadly speaking, the eighteenth century saw the rise of unregulated paper money, issued by both banks and governments. In the nineteenth century, this was followed by the note monopoly of national central banks in Europe, while in America US Treasury notes were of importance. The twentieth century was marked by the rising tide of bank money, i.e. book money. The twenty-first century is now on its way to becoming the age of digital money, led by Central Bank Digital Currency (CBDC), but likely to be accompanied and challenged by private cryptocurrencies of various types. Monetary turning points of that kind occur when the dominant money of the time poses problems that cannot be solved within the given framework, and a new type of money emerges that offers some solution or increased efficiency such as lower costs of production, provision and handling, improved ease of use and faster transferability. So far, incumbent monies were less convenient, circulated at lower use frequency and were more expensive to produce and handle than the competing new monies.