The previous chapter explored what happened when state control of the money system was removed. The bonfire of regulations in the US and the UK in the 1980s let loose a huge wave of money creation through bank lending. Financial markets were liberated and hot money flowed freely across the globe. It seemed as if the era of the sorcerer-state was over. Markets could look after themselves. Unfortunately, within only a few years the system was in crisis and states had to step in once more.

This chapter looks at three approaches to building a monetary system without the supervisory role of the state. The first is the euro, which was set up as a transnational currency where control of the money system was seen as a largely administrative exercise informed by a framework of basic rules. The second aims to build a money system without any monetary institutions, whether banks, central banks or states, through the use of cryptocurrencies. This approach sees the generation and circulation of money as a purely technical operation that doesn’t need supervision of any sort.

The third approach has a long history. It challenges national currencies and the role of the state by seeking to build monetary communities from the bottom up. There have been many examples of the local creation of currencies, variously described as social, complementary, or parallel to national currencies. These are almost the mirror opposites of the euro and cryptocurrencies, as they emphasise the social function of money rather than seeing it as a neutral technical or administrative matter.

As I have argued that money is both a social and a political phenomenon, it would logically follow that all three approaches are doomed to failure. In the case of the euro and cryptocurrencies, this is because they do not address the problematics of the social and political context of money. Social money, on the other hand, tends to find difficulty confronting the wider political and economic arena.

The euro: a magic potion for peace

As I have mentioned several times, the euro is in many ways the embodiment of modern money. It is clearly and unambiguously fiat money.