China is worried about the long-term decline of the dollar, mainly because it holds somewhere north of $1,000bn in US government debt. As a Chinese economist notes in a masterly piece of understatement, “a trillion (in greenbacks) is a hot potato.” Several other Asian countries holding vast dollar amounts are worried for the very same reason, and are starting to shift in their seats.
Then there’s Russia, which wants oil and other commodities quoted in another currency, if only because the rouble is in a hole. Finally, many commentators are beginning to think that this might be the right time to tame the forex jungle once and for all. If anything, it may hold in place the possibility of political appeasement.
As Financial Times columnist Martin Wolf suggests, perhaps it might be worth research, or indeed to “have a stab at a world currency.” History tells us this just might be possible. The great gold coins of yesteryear, especially Roman-minted ones, served as international currencies across much of the known world at the time.
They also had tremendous staying power – some of the coins were bona fide tender for centuries. For over 600 years, it was possible for a traveller to journey across vast swathes of Eastern Europe and well into Araby, paying his way with the denarius. And as gold historian Jill Leyland points out, as little as five coins were able to “span two millennia from the first century BC to almost the present day”.
A little over 2,200 years ago, the known world got its first international currency in the form of the Roman denarius. A handsome silver coin, it provided “the financial backbone for Rome’s climb to power,” says authority Richard G. Doty.
About 100 years later, in the 1st century BC, Rome issued the gold aureus, mainly for paying taxes. Worth 25 denarii at first, the coin had such enduring commercial integrity – it was 99 percent pure gold – that it was valued at 4,350 denarii by the fourth century AD. Between them, the aureus and denarius bought goods and services across the entire Roman empire for nearly 600 years.
Around 300AD the bigger solidus – or nomisma in the Greek-speaking world where it was also legal tender – replaced the aureus as Rome’s premier gold coin. Strictly speaking, the solidus wasn’t supposed to circulate outside the Byzantine empire but its reputation was so, well, solid that it jumped imperial boundaries and became the money of choice in bazaars and markets even in Arabic countries.
From the seventh century, Arab kingdoms copied the solidus, simply changing its name to the dinar (or bezant). Well into the tenth century, deals were still being done in the dinar.
After a period of wilderness for international currencies, the next cross-border coin was the Venetian ducat. First introduced in quantity in 1284, it gradually became standard currency throughout Europe, especially from the 16th century. Indeed it was still possible to buy and sell with ducats right up to the first world war.
The last great international coin, the sovereign first saw the light of day in 1489 and British governments were still using them in the 1950s in foreign climes, notably the Middle East where it was much-prized. Next? It could be today’s equivalent of economist John Maynard Keynes’ Unitas, the name he suggested in the thirties for a neutral international currency.