Layered money speeding up commerce

Creator	Time	URL
Nik Bhatia	1min	Full source

This is an excerpt from the book Layered Money by Nick Bhatia.

Layered money increased its velocity by bringing a tremendous advancement in the safety of its transfer: funds couldn’t be lost or stolen when transferred through a banking network. Fraud and insolvency notwithstanding, the enormous reduction in shipment of coins was a huge victory for international trade. Merchant bankers sent money around the continent effortlessly by using their balance sheets and professional network instead of by shipping physical gold and silver coins. The amount of outright risk a business owner took in sending physical metal during this time cannot be underestimated. Piracy was rampant, and maritime insurance apparatuses were in their infancy. Increased usage of deferred settlement increased money velocity, as final settlement could be postponed indefinitely with only the balancing of debits and credits.

Takeaway Centralizing gold and creating new layers of money on top made it possible for commerce to increase in speed and scope as technology improved.