Changing Payment Systems

Abstract

This chapter explores the changing nature and concepts of money and the corresponding changing infrastructures that are needed to support money and make it work. Money is intrinsically tied in with the working of an economy: Money is the ‘oil’ for a functioning economy enabling all the myriad of transactions to take place, providing mechanisms for people to be paid for their labour and for companies to charge for their good and services. Restricting the flow of money would restrict economic activity. Money is very much a human invention and technological innovations have enabled new forms of money to emerge. Advances in metallurgy, for instance, enabled coins to be produced; paper and the paper press enabled paper money to be widely produced. Equally though, innovation in money has also been driven by the needs of society, rulers and governments. An expanding economy and lack of copper in early China necessitated the early use of paper money there (Boyle 2002, 2003). Similarly the needs of the emerging US economy in the times of the Colonial Americas, combined with a shortage of coin money, also paved the way for paper money along with a supporting banking structure (Davies 1994, p.465) This chapter provides a different perspective on money, examining some of the drivers for change, how it changes and the evolution of corresponding support structures. First though we will have to examine some of the background to money and money concepts.