‘The king was in his counting house, counting out his money’ is a line from a traditional nursery rhyme ‘Sing a Song of Sixpence’. For king read sovereign. The sovereign is the one who rules, who may be a king, queen, tyrant, priest, president, parliament or sovereign people. Sovereign money is money created or controlled by whoever or whatever the ruler or ruling structure may be. This is a very different perspective on money from the forms of money in the last chapter whose origin is lost in tradition, or the spontaneous emergence of money in the market as the fairy tale in Box 1.1 would have it. Sovereign money is based on the concrete exercise of power.

Sovereign money overlaps with, but is not the same as, the public currency, particularly in the modern era. Sovereign money is the public currency created and circulated by the sovereign power. Today that power often rests with central banks, which, as the next chapter will illustrate, hold an ambivalent position between the sovereign state and the banking sector. In many states, the power to create the public currency is also subsumed by the banking sector itself. In contrast, this chapter discusses the historical and continuing role of ruling authorities in the administration of money.

Sovereign money differs from the traditional money discussed in the last chapter. Traditional money has the authority of custom. Those with higher status may exercise rights in relation to the traditional form of money, but they are not seen as the source of that money, nor can they determine its form or value. As we have seen, money in non-market societies was mainly related to social contexts: marriages, disputes, tributes. Most provisioning was done on a subsistence basis. This does not mean that economic transfers did not take place at all, but they were peripheral to the organisation of the society.

Sovereign money also differs from the fairy-story origin of money in trade. It emerged much earlier in human civilisation and was not dominated by precious metal. Forms of state money and accounting existed long before precious-metal coin and widespread markets. Unlike the fairy tale’s benign view of money emerging from industrious bartering communities, money’s sovereign history is associated with power, conflict and national identity.