Gavin Keeton Columnist

Money plays a critical role in all economies. Without it, everyday purchases and sales of goods and services cannot occur. For centuries, gold or silver coins represented money, with their value guaranteed by their precious metal content. Later they were replaced by notes that promised to pay the bearer their value in gold. Later even this promise disappeared. The only value banknotes now possess is our confidence that they can indeed be used in exchange for goods. Banknotes are increasingly being replaced by direct transfer through cards, electronic transfers or phone apps. Money in whatever form depends on trust in the national currency and the banking system. Collapses of confidence have occurred frequently, leading to runs on banks, where panicked depositors attempt to withdraw all their funds simultaneously. To avoid this, central banks usually provide the targeted bank with the short-term liquidity it requires. Often governments underwrite all bank deposits up to a certain val...

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