The new shape of money — Financial innovation and the evolution of currency

BY / Ken Dewoskin

　　The history of currency, from the beginning to the present day, is one of ever increasing virtualisation, a march from the steady reduction of intrinsic value to the point where currency has no physical existence at all.

The idea of money and its beginnings

　　The evolution of money, over 2,500 years old in several parts of the world, is an intimate and quintessential element of the history of humanity, society, and governance. In the earliest of Chinese historical texts, Shen Nong, one of the Three Sovereigns and Eight Emperors credited with founding Chinese civilisation, was said to be the progenitor of agriculture and herbal medicine. He was also said to be the first “regulator” of markets. That meant establishing standards for product weights and measures and establishing standards of value to settle transactions and store wealth, in other words, some form of money.

　　In broad measure, the evolution of money began with tokens of intrinsic value, fashioned from gold, silver, jade, cowry shells, and like materials that had intrinsic trading value within a community. The production of such tokens, coining, was a step toward convenience, because it made visible the amount of valuable content in hand without resorting to weighing or other forms of mechanical measurement. It is believed that the use of money in China dates back to the Neolithic age, when cowry shells were used. Archeologists have recovered bronzed cowry shells, dating from the time of China’s first well-documented Dynasty, the Shang (BC1500 – BC1046). Bronzing a shell was equivalent to printing a value on it, and this would appear to be potentially the earliest example of such a currency with a clearly designated and authorised value.

Ken Dewoskin, Deloitte China / Senior Advisor