What about money?

History of money shows us that it is a medium of exchange for trade. It can be a medium of exchange because it has a clear value that is trusted by everyone. 

Money is also a way to store value for the future. So, for example, we can save up our money to buy something expensive in the future. 

Finally, money is also a unit of account. It can be counted easily and it enables a clear value to be given to goods. 

The history of money

Barter

Many thousands of years ago, our European ancestors lived as hunters and farmers. 


Stone axe from 
the Stone AgeMetals had not been discovered, so they hunted and farmed with stone tools – this time was known as theStone Age. Stone Age men and women did not have the banknotes and coins that we use today. Instead, they would exchange goods with each other: for example, a hunter could exchange animal skins with a farmer for grain, or a fisherman could exchange decorative seashells for a polished stone axe with a hunter. This exchange is known as barter. An important feature of barter is that it involves the exchange of goods that have value.

A medium for exchange

When our ancestors learned how to make metals then exchanges became easier.

Silver nugget

This is because metals, such as gold silver, tin and iron, were valuable to everyone. So, a farmer could barter his cattle for a certain weight of silver, then later, the farmer could use some of this silver to pay his taxes. In this way, valuable metals and other objects became a 'measure of value', a 'medium of exchange' and a way to 'store value' until it is needed.

The first coins

Around 2600 years ago, the first coins were made in Asia Minor. 

Ancient Greek coin
The ancient Greeks quickly adopted this new idea and started producing silver and bronze coins, for example the silver drachma. These early coins contained a specified weight of metal with a certain value. And to guarantee this weight, the coins were stamped with a seal by the king or city or country that issued them. 

Coins were convenient because they could be counted rather than weighed. Because these new coins were a trusted and efficient 'medium of exchange' they helped greatly increase trade in the ancient world.

The first European currencies

To guarantee the value of coins, kings and governments strictly controlled their production.


Denarius depicting 
Juno Moneta
In ancient Rome, coin production was done in the temple of Juno Moneta – which is where the word 'money' comes from. 

Later, as the Roman Empire expanded, other mints were opened and the same roman coins were accepted for exchange all across Europe, from the British Isles to Turkey – the first pan-European currency. 



Later, as the Roman Empire broke up and the nations of Europe began to appear, each country kept control of its own coinage. 



Roman templeIt was from these European nations that we inherited the many coins and currencies that existed before the euro. These were often named after units of measure, such as the Italian lira and the Finnish markka, because the coins originally contained a fixed amount of gold and silver. 

A problem with many currencies is that, depending on the success of individual economies, the exchange rate between the currencies can vary a lot – this makes trade between countries a risky business, so it is discouraged.

20th century currencies in Europe

Before the euro was introduced most European countries had their own coins and banknotes – their own currency.


For travel and trade, it was necessary to change money as you changed country. In Germany you paid in Deutschmarks, if you left Germany and travelled to France you had to exchange your Deutschmarks for French Francs, and so on. 

The names of Europe's old currencies often revealed something about their origins:

• The schilling, used in Austria, was named after a mark on a stick used for counting.
• The tolar used in Slovenia comes from the medieval coin, the thaler, first minted in the Czech Republic in 1518 – the name 'thaler' is the origin of the term 'dollar' in the USA.
• The name of the Greek drachma means 'handful' and refers to a handful of six metal bars that were used as currency before the drachma was introduced in ancient Greece.
• The franc, meaning 'free' in French, was first minted in the 14th century to pay the ransom for the French King John the Good.