Entering the module
One sentence: money is not a thing but a promise — and its whole history is the story of who makes the promise and why we believe it.
After the module you will be able to:
- tell how we got from a clay tablet to an app on the phone;
- tell apart money that "is something" (silver, gold) from money that "is a promise" (a banknote, an account);
- answer the question "who stands behind this money?" for every currency you pay with.
Chapters:
- Before coins: debt and trust
- Things everybody wants
- The coin
- Paper
- Banks and banknotes
- The gold anchor
- 1971 — the anchor is lifted
- Plastic, screen, code → The iron principle of the module
For the youngest · ages 6–7
🐣 The youngest: A long time ago people had no coins. They gave each other things and remembered who owed what. They wrote it down so they would not forget. Money is like a promise: "I will give it back to you." The coin in your hand is also a promise that everybody believes.
Play together (5 minutes): Swap toys without money: "the car for two books". Then give the toys a price in coins and try again. Ask your child which was easier and why.
A question for the evening: "If there were no money, what would you give for an apple?"
A game from the catalogue: RZ-02 "Market without money" — https://pecuvo.eu/igri/katalog/#rz-02 (in Bulgarian)
Chapter 1 · Before coins: debt and trust
👧 Child Five thousand years ago, in the city of Ur, there were no coins. A farmer took grain today and promised to give it back after the harvest. A scribe wrote the promise on a clay tablet. The tablet was not money — it was memory. This is how money begins: somebody remembers that you owe.
🧑 Teenager Textbooks say: "First people swapped a sheep for flour. It was awkward, so they invented money." A nice story — except that nobody has ever found a society that lived like that. The anthropologist Caroline Humphrey wrote in 1985 that not a single "pure" barter economy has been described from which money emerged. David Graeber (2011) argues that debt came first: "I'll pay you back later". Barter did exist, but mostly between strangers and when money collapsed.
🧔 Adult In Mesopotamia (~3500–3000 BCE) temples and palaces kept accounts with clay tokens and tablets. The measures were barley and silver by weight. Silver served as a measure of value and of obligation long before it became a coin. Adam Smith's barter story (1776) is a logical model: it explains why it is convenient to have a common medium of exchange. Historically, money grew out of credit and accounting. Why this still matters: today, too, almost all money consists of records of debt — in the bank, not in your wallet (Module 4).
Myth → truth
- Myth: "First there was barter, then money."
- Truth: first there was the promise and the record. Barter is rather what people do when money disappears.
Who profits from this claim? The barter story makes money look "natural" and neutral, as something nobody invented. The debt story shows that there is always someone keeping the accounts.
Scene for 3D: a market in Ur. The child takes a clay tablet, "signs" it with a seal and puts it on the scribe's shelf. After the harvest the child comes back and the tablet is broken — the debt has been paid.
→ Continue at the source (the original is there — we only guide you):
- Met Museum — cuneiform tablets and accounts: https://www.metmuseum.org
- British Museum — the collection: https://www.britishmuseum.org/collection
Sources
- ✔ Smith, Wealth of Nations, 1776, Book I, Ch. 4 ("Of the Origin and Use of Money") — https://www.gutenberg.org/ebooks/3300
- ✔ Humphrey, "Barter and Economic Disintegration", Man, 1985 — https://doi.org/10.2307/2802220 (the quotation is confirmed through secondary sources; the original should be opened)
- ✔ Graeber, Debt: The First 5,000 Years, Melville House, 2011
- ✔ Schmandt-Besserat, "Before Writing, Vol. I: From Counting to Cuneiform", University of Texas Press, 1992 — the clay tokens (the edition was checked through a review in Historia Mathematica, 1993, DOI 10.1006/hmat.1993.1019, opened 21.10.2026)
Chapter 2 · Things everybody wants
👧 Child What would you accept as payment if there were no money? Something everyone wants and that does not go off quickly. People tried shells, salt, grain, cattle. Metals worked best — they do not rot and they can be cut into pieces.
🧑 Teenager "Commodity money" means things that have value in themselves: the cowrie shell is beautiful, salt preserves food, silver is rare. They work when they are hard to find, easy to carry and easy to count. Cowries served as money in Asia and Africa for a long time. The problem: if someone finds a "mine" of shells, everybody else becomes poorer.
🧔 Adult Commodity money plays a double role — an object and money. That is why its price depends on supply. Silver by weight in Mesopotamia was essentially a commodity-and-credit system: debts were counted in silver without every transaction needing real silver. This split — the measure of value versus the means of payment — runs through the whole of history up to today.
Myth → truth
- Myth: "Gold and silver are money because they are valuable."
- Truth: they are valuable also because everyone has agreed to accept them. Without the agreement they are just metal.
Who profits? Whoever controls the mining or import of the "money" — the mine, the harbour with the shells.
Scene for 3D: scales at a market. The child puts shells, salt and pieces of silver on them and sees which one "holds up": the salt gets wet, the shells run out, the silver stays.
→ Continue at the source (the original is there — we only guide you):
- British Museum — the commodity money collection: https://www.britishmuseum.org/collection
Sources
- ✔ British Museum — the "Money" gallery (Room 68); cowrie shells are among its highlights: https://www.britishmuseum.org/collection/galleries/money (opened 21.10.2026)
Chapter 3 · The coin
👧 Child About 2,600 years ago, in the kingdom of Lydia (today's Turkey), someone took a piece of metal, put it on an anvil and struck a stamp with a lion's head. That is how the coin appeared. The stamp said: "You don't need to weigh it — we guarantee it."
🧑 Teenager The first coins were made of electrum — a natural alloy of gold and silver. The Greek historian Herodotus writes that the Lydians were the first to strike and use coins of gold and silver. The big change is not in the metal but in the stamp: someone takes responsibility for the weight and the purity. From then on, the question "how much is money worth?" is also the question "whom do you trust?".
🧔 Adult The date is disputed. At the temple of Artemis in Ephesus (1904–05) the British Museum excavated 93 electrum coins left as an offering. They are dated to about 650–600 BCE, and a re-analysis of the find places them before ~640–620 BCE. It is not even certain whether the first coins were royal. What is clear is that the coin turns silver from a commodity into a token guaranteed by an issuer. And with it come the first temptations: to reduce the weight or mix in other metal while the stamp stays the same.
Myth → truth
- Myth: "The coin was invented to make trading easier."
- Truth: probably also for taxes, soldiers' pay and offerings to temples. Convenience for the market came later.
Who profits? Whoever strikes the coins. The difference between the value of the metal and the value of the stamp is profit for the issuer. Later this is called seigniorage.
Scene for 3D: an anvil. The child strikes the stamp and the coin "comes alive". Then the child sees someone clipping its edge and understands why later coins have a milled edge.
→ Continue at the source (the original is there — we only guide you):
- Sardis Expedition — the coins of Lydia (Kroll): https://sardisexpedition.org/en/essays/latw-kroll-coins-of-sardis
- LBMA — the Lydian electrum coin: https://www.lbma.org.uk/wonders-of-gold/items/lydian-electrum-coin
Sources
- ✔ Sardis Expedition, "The Lydians and their World" (Kroll) — https://sardisexpedition.org/en/essays/latw-kroll-coins-of-sardis
- ✔ LBMA, "Lydian Electrum Coin" — https://www.lbma.org.uk/wonders-of-gold/items/lydian-electrum-coin
- ✔ Notae Numismaticae 2012 (Heidelberg) — the debate about the date: https://digi.ub.uni-heidelberg.de/diglit/notae_numismaticae2012/0015
- Herodotus, "Histories", I, 94 (ancient text)
Chapter 4 · Paper
👧 Child Imagine your coins are made of iron, and for a piece of cloth you pay with a bag heavier than you. That is exactly how it was in Sichuan (China) 1,000 years ago. Merchants started giving each other slips of paper: "This note is worth this much iron." Then the emperor said: "I will print them."
🧑 Teenager The jiaozi notes were at first private receipts of merchants. In 1024 the state under the Song dynasty took over issuing them. These are the first paper money issued by a state. The lesson came later: when the state needed money (for war, for the court), it printed more. The notes lost value. A few centuries later China stopped using paper money.
🧔 Adult Paper separates money from metal completely: the note is worth something because the issuer promises and because taxes are accepted in it. This is the first big experiment with money whose value depends on the discipline of the issuer. The result repeats: convenience → abuse → inflation → loss of trust. We will see the same pattern in Europe (Chapter 5) and in the 20th century (Module 4: the hyperinflations).
Myth → truth
- Myth: "Paper money is a European invention."
- Truth: China had it six centuries before the first European banknotes.
Who profits? At first — everyone, because it is lighter to carry. Then — the issuer, who can print more. Those who hold the notes lose when they lose value.
Scene for 3D: a two-storey room. Downstairs — a pile of iron coins that cannot be lifted. Upstairs — a light note. With every "printing" there are more and more notes, and the price of the rice sack on the wall goes up.
→ Continue at the source (the original is there — we only guide you):
- — we are looking for a museum source (MoneyMuseum Zurich / British Museum) on jiaozi; until then, no link
Sources
- ✔ State issue from 1024 (some sources give 1023) — https://en.5000yan.com/history-of-china/song-liao-and-jin/worlds-earliest-paper-money-guan-jiaozi.html · https://www.thestandard.com.hk/news/article/59501/China-celebrates-paper-currency-anniversary
- Weak source for the end of paper money in the 15th century (wiki; to be replaced with an academic one) — https://samurai-archives.com
Chapter 5 · Banks and banknotes
👧 Child In London 350 years ago people left their gold for safekeeping with the goldsmiths. The goldsmith gave a receipt: "I am keeping 10 coins for you." Soon people started paying directly with the receipts. The gold stayed in the vault, and the receipts travelled around the city.
🧑 Teenager Here comes the big discovery: if not everyone comes for their gold at the same time, the goldsmith can issue more receipts than there is gold. That is how banking is born. In Sweden, Stockholms Banco (founded in 1656) issued the first real banknotes in Europe in 1661. They were not tied to a specific deposit — their value rested on trust. The bank printed too many and went bankrupt. Out of it came the Riksbank (1668), the oldest central bank still operating. The Bank of England was founded in 1694.
🧔 Adult The Stockholms Banco banknote is a turning point: the bank lends in notes without waiting for deposits. This is the seed of today's mechanism — lending creates money (Module 4). Its failure also shows the limit: if the promises outgrow the trust, everyone rushes for the door. Central banks appear to bring order to the promises of private banks — and to finance the state.
Myth → truth
- Myth: "The bank lends out the depositors' money."
- Truth: since the 17th century banks have created new means of payment when they lend.
Who profits? The bank earns interest on money it created itself. Society gains if the credit goes into productive work. It loses if the promises fall apart.
Scene for 3D: a vault and a street. The child watches the receipts leave the vault and multiply in the street. If the child presses "everyone to the gold!", a queue forms at the door.
→ Continue at the source (the original is there — we only guide you):
- Riksbank — the historical timeline: https://www.riksbank.se/en-gb/about-the-riksbank/history/historical-timeline
- Citéco — the first European banknote: https://citeco.fr/en/first-european-banknote
- Bank of England Museum — the free digital guide: https://www.bankofengland.co.uk/museum/free-digital-guide
Sources
- ✔ Riksbank, "1661 — First banknotes in Europe" — https://www.riksbank.se/en-gb/about-the-riksbank/history/historical-timeline/1600-1699/first-banknotes-in-europe/
- ✔ Riksbank, "1668 — Sveriges Riksbank is founded" — https://www.riksbank.se/en-gb/about-the-riksbank/history/historical-timeline/1600-1699/sveriges-riksbank-is-founded/
- ✔ Citéco, "First European banknote" — https://citeco.fr/en/first-european-banknote
- ✔ Bank of England, history (founded 27.07.1694) — https://www.bankofengland.co.uk/about/history · the goldsmiths' receipts — the BoE museum: https://www.bankofengland.co.uk/museum/online-collections/blog/our-earliest-bank-of-england-note
Chapter 6 · The gold anchor
👧 Child For a long time a banknote was like a ticket: you took it to the bank and they gave you gold. Gold was the anchor — it did not let money "drift away".
🧑 Teenager Under the gold standard every banknote can be exchanged for a fixed amount of gold. Britain applied it in practice from the 18th century and by law from 1821. It sounds safe, but it has a price: when there is not enough gold, there is not enough money. So came deflations (prices fall, and so do wages and jobs) and bank panics. In 1944 at Bretton Woods countries agreed on a new anchor: the dollar was tied to gold ($35 per ounce), and the other currencies to the dollar. The IMF and the World Bank were created.
🧔 Adult Bretton Woods is an anchor with an intermediary: an ordinary person cannot exchange dollars for gold — only the central banks of other countries have that right. Full convertibility of the dollar really worked from 1958. The system required the US to defend the price of gold. When more dollars piled up abroad than there was gold in Fort Knox, the promise became impossible to keep.
Myth → truth
- Myth: "Money backed by gold is stable."
- Truth: it is stable against gold, not against life. The gold standard came with deflations and panics.
Who profits? Holders of gold and creditors — debts do not lose value. Debtors and people looking for work lose in a deflation.
Scene for 3D: a ship at anchor in a harbour. The anchor is gold. When the wind (trade) picks up, the chain pulls tight. The child can let it out and watch the ship drift.
→ Continue at the source (the original is there — we only guide you):
- Federal Reserve History — the end of gold convertibility: https://www.federalreservehistory.org/essays/gold-convertibility-ends
- IMF — "Money Matters": https://www.imf.org/external/np/exr/center/econed/g_matter.htm
Sources
- ✔ Bank of England, history (1694) — https://www.bankofengland.co.uk/about/history
- ✔ IMF, "Money Matters" — Bretton Woods, 1–22.07.1944 — https://www.imf.org/external/np/exr/center/mm/eng/cc_sub_4.htm (the old address histcoop.htm no longer works)
- ✔ Federal Reserve History, "Gold Convertibility Ends" ($35; convertibility from 1958) — https://www.federalreservehistory.org/essays/gold-convertibility-ends
Chapter 7 · 1971 — the anchor is lifted
👧 Child On 15 August 1971 the President of the United States said: "We will no longer exchange dollars for gold." Since then a banknote has not been a ticket for gold. It is worth something because everyone — the state, the shop, you — accepts it.
🧑 Teenager This is the "Nixon shock". Countries could no longer exchange dollars for gold. By 1973 the major currencies began to float — their price is set on the market every day. That is how we still live: our money is fiat (from the Latin fiat — "let it be"). It is not tied to a metal. It rests on the law, on taxes and on trust in the central bank.
🧔 Adult After 1971 the "backing" of money is not an object but an institution:
- legal tender;
- taxes that are paid in this currency;
- a central bank that keeps inflation under control — the ECB's target is 2 %.
This gives flexibility: in a crisis, the response can be through interest rates and liquidity. It also carries a risk: if the institution loses trust, there is nothing material underneath. Not all countries float — some tie their currency to another one. Bulgaria did exactly that in 1997, and since 2026 it has been in the euro (Module 2).
Myth → truth
- Myth: "Money today is worth nothing because there is no gold behind it."
- Truth: behind it stand taxes, laws and an economy. Its value is real as long as the institution is strong — and that is exactly why we must keep an eye on it.
Who profits? States gain freedom in crises. Debtors gain from moderate inflation. Those who hold a lot of cash for a long time lose — inflation eats it.
Scene for 3D: the same harbour as in Chapter 6, but the anchor is up. Instead, the ship has a helm and a captain (the central bank). The child steers and sees when the ship rocks too much.
→ Continue at the source (the original is there — we only guide you):
- Federal Reserve History — 15 August 1971: https://www.federalreservehistory.org/essays/gold-convertibility-ends
- ECB — "What is money?": https://www.ecb.europa.eu/ecb-and-you/explainers/tell-me-more/html/what_is_money.en.html
Sources
- ✔ Federal Reserve History, "Nixon Ends Convertibility of U.S. Dollars to Gold" — https://www.federalreservehistory.org/essays/gold-convertibility-ends
- ✔ ECB, "What is money?" — https://www.ecb.europa.eu/ecb-and-you/explainers/tell-me-more/html/what_is_money.en.html
- ✔ ECB, 2021 strategy (2 % target over the medium term) — https://www.ecb.europa.eu/mopo/strategy/html/index.en.html
Chapter 8 · Plastic, screen, code
👧 Child Today you rarely see real money. You pay with a card or a phone. Money is numbers in the banks' computers. When you buy an ice cream with a card, one number goes down and another one — at the shop — goes up.
🧑 Teenager The first payment card accepted in many places was Diners Club (1950). Today, in shops in the euro area, cards lead by value of payments (45 % against 39 % for cash), while cash still leads by number of payments (52 %) — according to ECB data for 2024. In 2008 someone under the name Satoshi Nakamoto published the idea of Bitcoin: money without a bank, with a shared "notebook" (the blockchain) that everyone keeps. Meanwhile the ECB is preparing a digital euro — central bank money in digital form. These are two very different ideas about the future of money (Module 5).
🧔 Adult The digital money in your bank account is not central bank money. It is the commercial bank's liability to you, guaranteed up to €100,000 (Module 3). Crypto promises money without an issuer. Stablecoins promise "1 dollar", but behind the promise stands a private company. A digital euro would be a direct liability of the ECB. The question from Chapter 1 stays the same: who keeps the accounts and who guarantees the promise?
Myth → truth
- Myth: "The money in the bank is my money."
- Truth: it is a claim on the bank. That is why deposit guarantees and supervision exist.
Who profits? Payment networks take a fee on every payment. Banks earn on deposits on which they pay no interest. Crypto exchanges earn on trades, whether the price goes up or down.
Scene for 3D: a museum that "dematerialises". Coins become paper, paper becomes a card, the card becomes light in a phone, the light becomes code in a chain of blocks.
→ Continue at the source (the original is there — we only guide you):
- ECB — the digital euro: https://ecb.europa.eu/euro/digital_euro/pilot/html/index.en.html
- The Bitcoin white paper (the original): https://bitcoin.org/bitcoin.pdf
Sources
- ✔ Diners Club, 1950 — the first payment (charge) card accepted by many merchants
- ✔ ECB, payment statistics — https://www.ecb.europa.eu/stats/payment_statistics (the address works) · ✔ ECB, "Study on the payment attitudes of consumers in the euro area (SPACE) 2024": in shops, cash — 52 % by number, cards — 45 % by value (cash — 39 %): https://www.ecb.europa.eu/stats/ecb_surveys/space/html/ecb.space2024~19d46f0f17.en.html (opened 21.10.2026; corrected: "cashless dominates" holds by value, not by number)
- ✔ The Bitcoin white paper — https://bitcoin.org/bitcoin.pdf (31.10.2008 is the day it was sent to the mailing list; the PDF carries no date)
- ✔ ECB, the digital euro (preparation phase) — https://ecb.europa.eu/euro/digital_euro/pilot/html/index.en.html
The iron principle of the module
Money is a promise. Before you take, hold or give money — ask who is making the promise and what will happen if they do not keep it.
- 👧 Child: "Whose promise is it?" — Mum's, the bank's, the game's.
- 🧑 Teenager: before you buy crypto or "points" in a game — who issues them and can they switch them off?
- 🧔 Adult: how much of your money is a claim on one bank (over €100,000?), how much rests on one single promise.
Your step in Pecuvo: in "Net worth", split your accounts by who makes the promise: cash box (nobody — you hold it), bank (the bank + the guarantee), fund, crypto (who?). See how much depends on one promise.
Check yourself (3 questions per level)
- 👧 1. What did the scribe in Ur write on the tablet? 2. Why is salt not good money? 3. What does the stamp on the coin say?
- 🧑 1. Is there evidence of a society that lived on barter alone? 2. What happens when the issuer prints too many notes? 3. What changed on 15.08.1971?
- 🧔 1. How do commodity, backed and fiat money differ? 2. Why did Stockholms Banco fail? 3. Whose liability is the money in your bank account?