Book Review: Shades of Sovereignty

For the first time in two centuries, since the establishment of central banks began, the definition of money is being reviewed. A combination of quantitative easing, a response to the 2008-9 financial crisis which goes on today, the emergence of big tech companies with global reach to billions of people and the development of new cryptocurrencies, particularly those based on distributed ledger technology (DLT), means the certainties of physical fiat currencies and the established financial institutions and markets are under review. Change is in the air.

In that context Paul Wilson’s book – ‘Shades of Sovereignty: Money and the Making of the State’ – is a useful read. He looks at the role of money in the making of the state through the ages right up to the pandemic. He demonstrates that although money is a critical element in defining nationhood, the interaction of money, citizen and state has been incredibly fluid around the world and over time. It appears that there are fundamentals that have to be got right for money to work and where those are lacking, a range of approaches have been tried and have worked. As we work through the implications of cryptocurrencies such as bitcoin, stablecoins and central bank digital currencies, perhaps we should also look back at these examples.