Throughout the ages, the ability to control currency has been a cornerstone of power for governments and rulers. The relationship between money and authority highlights how financial systems can shape societies. Historical events demonstrate that those who manage currency hold significant sway over economies and social structures.
This narrative begins with Tudor England, where King Henry VIII engaged in a practice known as the Great Debasement between 1542 and 1551. By reducing the silver content in coins from over 90% to just about a third, he financed wars and royal extravagance, ultimately leading to inflation and a decline in public trust towards currency.
The lessons from history
Similar tactics were employed in ancient Rome, where emperors manipulated the denarius by diminishing its silver content, contributing to economic instability by the 3rd century AD. These historical precedents illustrate a recurrent theme: money is never neutral.
The rise of paper money
In the 11th century, the Song dynasty in China introduced paper money, revolutionizing state control over trade and taxation. However, over-issuance of these notes by subsequent dynasties like the Ming led to inflation and a subsequent loss of confidence in the currency.
From these historical events, it becomes clear that currency is a tool of governance, often used to reinforce authority, control populations, or mask financial inadequacies. The establishment of central banks, such as the Bank of England in 1694 and the US Federal Reserve in 1913, formalized this monetary authority.
The digital transformation of currency
As we navigate into the digital age, the narrative of currency is evolving once more. Senior Managing Director of the World Bank, Axel van Trotsenburg, emphasized in 2024 that embracing digitalization is essential, not optional. This shift is not merely about transitioning to online banking; it signifies an impending transformation of our currencies and the regulatory mechanisms governing them into fully digital formats.
Governments today are exploring how digital currencies can extend their influence both domestically and internationally. Different political ideologies and governmental structures lead to varied visions of future currency systems. For instance, in March 2024, former President Trump expressed his opposition to the creation of a central bank digital currency, framing it as part of a larger contention regarding the control of money.
Populism and the control of currency
In the United States, the Federal Reserve traditionally monopolizes the issuance of currency, whether in physical or digital form. Trump’s criticisms of the Fed and its chair, Jerome Powell, echo historical populist sentiments, reminiscent of President Andrew Jackson’s opposition to the Second Bank of the United States in the 1830s.
In March 2025, Trump’s establishment of a Strategic Bitcoin Reserve marked a significant shift in the policy landscape, as the largest economy in the world officially recognized bitcoin within its financial framework. This reflects a move towards integrating bitcoin into the state’s monetary strategy, redefining its role beyond that of mere investment.
The rise of Central Bank Digital Currencies
As the world’s most valuable cryptocurrency, bitcoin has gained recognition as a speculative investment, likened to “digital gold.” However, Trump’s advocacy for it as “freedom money” also brings ethical dilemmas concerning the fusion of public authority and private financial interests.
This evolving scenario prompts crucial questions about the future of traditional banking institutions. A paper from the Bank for International Settlements in 2023 highlighted that the decentralization of monetary functions could lead to a new era of competing monetary authorities.
Global competition over digital currency
With countries striving to create their Central Bank Digital Currencies (CBDCs) to mitigate dependency on the dollar, the financial landscape is undergoing a significant transformation. Nations like China and those in the Caribbean have already initiated CBDCs, with China’s digital yuan processing nearly $1 trillion in retail transactions by mid-2024.
As nations race to develop their digital currencies, debates about privacy, security, and regulatory oversight are becoming increasingly pertinent. Critics argue that CBDCs could serve as instruments of surveillance, allowing governments to monitor and control financial transactions in unprecedented ways.
Conclusion: Trust in the future of currency
As technology advances, the design and governance of future currencies must prioritize public trust. The evolution of money is not merely a technological issue; it is fundamentally about the confidence and security of the systems we use. The integration of citizen input and independent oversight will be essential in shaping a digital monetary future that upholds the values of privacy and economic freedom.
