Money and Monetary Policy Brief

Author's name: Zakaria Mahran

This study briefly recounts the history of the origin and development of money, from the time when ancient humans used bones, shellfish, and bulls as a form of currency in their transactions, to the emergence of paper money. It discusses the beginnings of the adoption of precious metals, such as copper and gold, in the manufacture of coins, and how this currency controlled the economies of major empires and sparked wars between them. It then depicts the form of this currency throughout the ages until it reached the hands of Muslims, who added their own character to it, and the emergence of the money-changer system, which paved the way for the emergence of the banking system. It then uses paper money to replace metal money, abandoning the gold standard, and the subsequent conflict between countries during World War I. The economic devastation caused by this war led to inflation in many countries, which were unable to escape this impasse except by returning to the gold standard. It also sheds light on the American experience and the beginnings of the conflict between the British pound and the US dollar.