In an era of rising new powers and new financial technologies, could the US dollar’s status as the world’s reserve currency finally come to an end? To answer such questions, it helps to take a historical perspective, as the future of currency may well resonate with its deep past.

VITERBO, ITALY – We live in a time of unprecedented monetary innovation. New private funds like Bitcoin abound, as new technologies have made possible payment systems that bypass traditional banks. As the COVID-19 pandemic pushed the frontier of “unconventional” monetary policies, central banks debated whether to create new digital currencies (CBDCs) themselves.

Never before has the future of money been so uncertain – and therefore full of possibilities. And yet, a historical perspective can help us make sense of uncharted terrain, because the future of money may well resonate with its deep past.

I say “deep past” because it’s important to look beyond the familiar notion of money that most people have. They imagine a national currency, issued only by a state authority within the territorial borders. In the United States, there is the dollar; in Japan, there is the yen; and in Europe there is a large regional currency bloc. But this type of currency is a recent development, dating only to the 19th century, and arguably even later.