The phenomena of money in my mind, is similar in certain aspects with a global religion - almost every individual, every society and nation has unrelenting faith in its goodness and utility, its power to address human desire and alleviate human distress, and adheres to every ritual necessary to enhance its power and protect its sanctity and purity. Of course, money per se may not depict morals or ethical values - qualities that every religion can boast of. The point however, is that money, is probably the single most powerful and influential phenomena in modern society.

Money as a measure of value and a means of exchange has come a long way since the first instances of barter using livestock, replaced by the use of precious metals, that gradually gave way to cheaper and more convenient forms of currency. The demand for currency has grown proportionately with the growth of civilisation to facilitate trade and commerce, public finance and welfare, growth and development across civilisations. The aggregate value of wealth and consequently, money has grown across the globe manifold since the nineteenth century, even though the actual volume and value of currency representing such value has been limited in its growth. To illustrate, the accumulated wealth of a person in the 15th century would be valued amongst other physical assets, based on the number of gold or silver coins that he possessed. In the twenty-first century, a person’s wealth manifold to the 15th century counterpart, may not be represented through a single physical asset or gold coin - but based on her bank balance, shareholdings, financial investments and so on and so forth.

With the ever-increasing demand for money to meet society’s financial needs coupled with concerns of flexibility in usage, transfer and storage of money, currency has evolved from its physical manifestation in earliest forms of civilisation to a virtual phenomena in the current day. This has been made possible through continued innovation and evolution of the form of currency to facilitate exchange of higher values through cheaper and more convenient, and yet widely accepted medium of payment.

This gradual development and acceptance of money in its myriad forms (physical and virtual) as a measure of value across continents has been possible due to our faith in its sanctity and stability, its ability to be converted readily into something equal to the value it claims to possess.

As an illustration, an artisan in the 15th century planning to set up his own workshop, would probably have approached the local moneylender for a loan of ten gold coins as capital to start his business. The moneylender in turn, would have found his comfort in lending such amount, by mortgaging the artisan’s house as security for the loan apart from demanding two gold coins as interest for lending money for half a year. The value of the artisan’s capital and the amount loaned by the moneylender would have been represented by their physical value, and there would have been no occasion to multiply the value over and above the value of the physical assets.

However, with centuries of ingenious innovation in moneylending / banking and monetary systems backed by government sanctions, the potential to create value from the same ten gold-coins, would be limitless. Consider this, the same artisan approaches the bank for ten gold coins. The bank has 10 gold coins in its reserve, which it agrees to lend out having regard to the business plan and market demand of potteries. The bank instead of handing over the ten coins to the artisan, credits it to his account with the assurance that the same will be available to him on demand, thus creating a virtual value of 10 gold coins in the hands of the artisan. For setting up his workshop, the artisan employs a builder at the cost of 6 gold coins to build the workshop. Let us assume for simplification, that the builder approaches the same bank for a loan of 4 coins to procure building materials. The bank is happy to finance the builder since there is a demand for building workshops for artisans, which demand has arisen since the bank had earlier provided a loan to the artisan to set up his workshop. The bank thus lends out 4 coins to the builder out of the same corpus of 10 coins, thus creating an additional value of 4 coins. The total value of money available in the economy is thus 14 gold coins, while the actual corpus with the bank is actually 10 coins. This example can be multiplied by bringing into the picture, the store owner who plans to buy the potteries from the artisan and therefore takes a loan from the bank to pay an advance to the artisan, and so on and so forth.

Due to the ingenuity of the financial innovations and our faith in the banking system, it is possible to multiply the virtual value of money available in the economy manifold in comparison to the actual value held by the banks. However, in times of crisis e.g. the Great Depression that had swept America between 1929 and 1939, or the more recent global economic crisis, the demand for realisation of the virtual value of money may outpace the actual volume of money available in the system leading to disastrous consequences, where the entire economic system goes into a tizzy and loses the trust of people.

There is a close and inextricable link between the stability of money and monetary systems of a country and its economic and welfare policies, trade and economy, balance of payments, political stability, internal and international conflicts, public health and physical disasters. Everything that can have even the slightest impact on the reputation of a currency is a critical and inexpendable element of currency.

The administrative and judicial machinery of a country plays an important role in maintaining and enhancing the reputation of its national currency. The manner in which the administration and the judiciary conduct themselves in their sphere of work, demonstrates the importance, these institutions place on the rule of law. Where administrative actions are not guided by objectivity and rationality, or where the judiciary does not exhibit consistency and maturity of approach or promptitude in addressing infractions of law, these would be tell-tale signs that the governmental approach and policies are not well attuned to the basic principles and philosophies of a stable society. This is likely to have an adverse impact on how other societies / nations view the potential of growth and stability of such country, and correspondingly, threats of corruption and systemic inefficiency.

On the other hand, institutionalisation and transparency of decision making process in government actions, objective and consistent approach in policy making based on well accepted tenets of law, exudes a sense of maturity amongst government machineries. Similarly, the promptness in judicial action, consistency of approach and independence of action, respect for well settled precedents of law assures the existence of a strong and independent judicial system that would ensure the rule of law even where the legislators or administrators go astray.

The importance that the government of a country gives towards its business and finance, is best reflected in the value they place on human rights, and overall growth and development of its population, education and healthcare facilities. These aspects define the commitment of a society towards development of its intrinsic strength, which in turn influences its reputation and the value others would place on the state machinery including their monetary system.