Finance and the financial world seem complicated to most people. They are full of numbers, charts, targets, forecasts, and accounting that only experts appear to fully understand. This naturally creates the feeling that the smartest thing to do is trust “those who know” — investors, bankers, ministers, and other specialists operating inside the system. We are told about the economy through interest rates, budgets, GDP, and many other indicators, but one metric sits at the center of public discussion: the Consumer Price Index, or official inflation. It is used to assess the health of the economy, set monetary-policy targets, compare investment returns, and justify economic policy.

The Consumer Price Index describes only one part of the picture. It shows how the prices of a selected basket of goods and services change, but it does not tell us how money itself is created, how its quantity changes within the economy, or why its value may decline over time. To understand the monetary system itself, we have to look beneath the price level and ask where the money in circulation actually comes from. The Consumer Price Index measures a visible outcome; money creation helps explain the process beneath it.

Understanding how money comes into existence does not require complex economic models at the outset. What matters first is the distinction between base money and the money created within the banking system. A central bank has the exclusive ability to create base money, or M0: physical cash and commercial-bank reserves held at the central bank. A central bank can introduce new base money into the system, for example, by purchasing government bonds or lending to banks. From there, money flows into the commercial banking system, but most of the money people and businesses use every day is not created directly by the central bank.

It is in commercial, everyday banks that the less widely understood part of money creation takes place. This is not a secret, yet its significance is surprisingly absent from ordinary public discussion. When a bank grants a customer a loan, it does not simply take that amount from someone else’s existing deposit and pass it on. When the loan is issued, a new deposit — new bank money — is created at the same time. [1]Bank of England (2014), “Money creation in the modern economy”.bankofengland.co.uk In accounting terms, the bank records a claim against the customer, the loan, on the asset side of its balance sheet, and an equal deposit in the customer’s account, a liability of the bank, on the other side. A single transaction therefore creates both a debt and money the customer can begin using in the economy.

This form of money can be described as book money — Buchgeld in German — and distinguished from central-bank base money and physical cash. Their technical nature is different, but from the user’s perspective both function as money: euros in a bank account can be used to pay, purchase goods, and settle obligations. This is why loan and deposit volumes are structurally connected within the banking system. When banks create new loans, new deposits appear and the money supply expands; when loan principal is repaid, the corresponding bank money is extinguished again. A large share of money therefore comes into existence, and disappears, through credit creation.

Fractional-reserve banking is commonly described by saying that a bank keeps only part of customer deposits in reserve and can lend the remainder. In a simplified 10% example, €10 of a €100 deposit would remain as reserves while €90 could be lent out — already a significant degree of financial leverage. Actual credit creation makes the picture even more striking, because a new loan does not need to arise from the direct transfer of an existing deposit; the bank creates a new deposit when it grants the loan. In the simplified example, a €100 reserve base can therefore support the creation of up to €900 in new loan money, leaving €1,000 in total accounting claims: €100 in reserves and €900 created through credit. The same fractional-reserve principle therefore produces far greater monetary leverage than the intuitive idea that “banks lend deposits onward” initially suggests. A large part of the modern monetary system is built on this process of credit creation.

Banks are able to operate this way because the law gives them a special role. The state licenses banks and establishes the legal and supervisory framework in which they operate; in Estonia, supervision is carried out by the Financial Supervision Authority, while the system is also supported by arrangements such as deposit guarantees. The central bank, in turn, determines an important part of the rules of the system, including capital and reserve requirements, monetary-policy interest rates, and settlement conditions between banks. Commercial banks therefore do not create money outside the system, but as part of a broader institutional framework through which money creation takes place.

Within that framework, banks decide to whom they extend credit, under what terms, and in what amount, and they earn interest on those loans. In a debt-based system, borrowers must repay not only principal but also the associated interest cost. The functioning of the system therefore depends on continuing economic activity, new credit, and monetary circulation through which existing obligations can be serviced. Credit creation is not a side effect of banking; it is one of the central mechanisms of the modern economy.

Money creation through bank lending is not an alternative theory. It is a process explicitly described by central banks and international monetary institutions themselves:

• Bank of England (2014) states in Money creation in the modern economy: “Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.” [1]Bank of England (2014), “Money creation in the modern economy”.bankofengland.co.uk
• Deutsche Bundesbank (2017) explains in How money is created that banks can create book money through an accounting entry and that the conventional image of banks as merely passing on previously deposited funds does not accurately describe the lending process. [2]Deutsche Bundesbank (2017), “How money is created”.bundesbank.de
• Bank for International Settlements (1979) discussed the ability of international banks to create money and liquidity through credit in the first issue of its Economic Papers series. It is one of the earlier official descriptions of the logic of the modern credit-based monetary system. [3]Bank for International Settlements (1979), “Credit and liquidity creation in the international banking sector”, Economic Papers No 1.bis.org
• Richard Werner, studying the Japanese financial system, demonstrated academically and empirically how banks create deposits when extending credit and how the central bank can influence that credit-creation process. Most of the money used in everyday life is commercial-bank money, while a smaller share consists of cash and reserves created by the central bank. [4]Richard A. Werner (2003), Princes of the Yen: Japan’s Central Bankers and the Transformation of the Economy. See also the author’s 2014 empirical study.eprints.soton.ac.uk

This is where one of the most important conceptual shifts in understanding the monetary system occurs. The conventional picture says that people put money into banks and the banks lend that same money to someone else; in actual bank accounting, the loan itself creates the corresponding deposit. Looking at a bank balance sheet can therefore leave the misleading impression that deposits must exist before loans can be made, even though a large share of deposits exists precisely because loans were created. Once this relationship becomes clear, money supply, debt growth, and inflation begin to look very different.

In contemporary public language, inflation almost always means rising prices, and the Consumer Price Index is its main measure. If prices rise by 2–3% per year, this is generally treated as normal and even as a feature of a healthy economy. Historically, however, the word “inflation” was also used to describe an expansion in the quantity of money: the amount of currency or monetary claims in circulation increased, while rising prices were a possible consequence rather than the only definition of the phenomenon. This is more than a terminological distinction, because the price level and the money supply answer two different questions. One tells us what is happening to consumer prices; the other tells us what is happening to the quantity of money itself.

When inflation is viewed only through the changing price of a selected basket of goods, it can be represented by a single, relatively easy-to-track percentage. Money-supply growth captures a broader change in how much money and credit exists in the economy and shifts the focus from prices to money itself. From the perspective of this article, this is the more fundamental layer: creating new money dilutes the share represented by existing money within the total and reduces its relative scarcity. In Estonia, M2 money-supply growth has often been in the range of roughly 7–10% per year over long periods, and at times even higher. From this perspective, the dilution of money’s value can be considerably greater than a single CPI figure initially suggests.

The difference becomes practical as soon as we evaluate the return on savings and investments. If we assume official inflation of 2%, a 3% bank-deposit rate or a 5% pension-fund return appears to provide a positive real return. If the money supply is simultaneously growing by 7–10%, the same result looks very different: a person’s assets may rise nominally while their share of the expanding monetary whole declines. This changes how we think about saving, investing, and retirement and helps explain why simply holding money may fail to preserve the value created by a person’s work over long periods. Paradoxically, those most exposed may be the people who behave most conventionally “responsibly” — saving money, avoiding debt, and taking little investment risk.

The same issue extends from the individual to public policy. If budgets, pensions, taxes, and public debt are discussed mainly through the lens of the Consumer Price Index, changes in the money supply can easily disappear from the wider picture. At an even more fundamental level, this is a question of education: we have become accustomed to treating the gradual decline in money’s purchasing power almost as a law of nature, even though it is a property of a particular monetary system. Money is an equivalent of human work and energy, and the continuing dilution of its value affects how much the work performed in the past can command in the future. The distinction between visible price inflation and deeper monetary dilution is therefore not merely an economic technicality; it reaches into savings, pensions, tax policy, and the long-term distribution of wealth throughout society.

At the same time, we hear more and more about investing and financial freedom. Financial gurus, conferences, and courses create the impression that investing is simply a natural responsibility of the modern individual, yet surviving and succeeding in markets requires knowledge, time, and the capacity to bear risk, and many investors do not achieve the results they expect. There is something fundamentally strange about this: alongside their primary work, people must learn to allocate capital almost professionally simply to prevent the value of previously earned money from eroding over time. Add the influence of markets, the information environment, and large capital flows, and investing is neither a neutral nor a simple game. We can see this clearly by looking at our own local financial market.

The OMX Baltic 10 index contains ten of the most actively traded and liquid stocks on the Baltic exchange. Its price index has almost doubled over the past decade, while the total return including reinvested dividends approaches a threefold increase. Viewed on its own, this is a very strong result, and charts like this are commonly used to demonstrate the long-term benefits of investing. The picture changes, however, when we compare asset-price growth with the change in the money supply over the same period.

Over the last decade, the money supply in Estonia has increased by roughly 2.5 times, or about 9.5% per year on average; over twenty years, it has increased by roughly 6.6 times, or about 9.8% per year. In that comparison, even the returns of stronger Baltic companies no longer look quite the same, because a large share of nominal growth takes place in an environment where the quantity of money itself is expanding rapidly. This does not mean that companies create no real value, but it does mean that investment performance should also be compared with changes in the monetary measuring stick itself. Once we see the expansion of the money supply, the next question naturally follows: where does the credit through which much of this new money enters the system actually come from?

In the current financial system, economic growth is therefore closely linked to the growth of credit and debt. New investment, property purchases, consumption, and business expansion can all be financed to a substantial degree through newly created loan money, while continued growth requires increasing levels of economic activity. If today’s growth relies on an ever-larger amount of debt that must be repaid from future income, then part of that future income is already being used in the present. This is why even the ambition to become one of Europe’s fastest-growing economies should prompt a deeper question: what exactly is that growth made of, and at what cost is it being achieved?

The modern monetary system did not emerge from a single decision. It developed step by step over centuries. Once we understand that banks can create money through lending and that economic expansion depends to a significant degree on the growth of credit, the system can initially seem highly unusual. Its normalization can only be understood together with the historical development of economic theory, banking, and money itself. Today’s fiat- and credit-based system is the result of a series of solutions, each of which addressed problems of its own era while gradually changing the nature of money.

Classical economic theory of the 18th and 19th centuries, associated with thinkers such as Adam Smith and David Ricardo, placed strong trust in the market’s ability to regulate itself. In a crisis, prices were expected to adjust, inefficient companies to disappear, and the economy eventually to find a new equilibrium; a similar belief in the market’s natural ordering force and in constrained money survives in the Austrian school of economics. John Maynard Keynes developed his central ideas under very different conditions, during the Great Depression of the 1930s, when unemployment was immense and spontaneous economic recovery was too slow. He argued that the problem could lie in insufficient demand: if everyone saves and spending disappears, the economy can stall. In that situation, he believed the state should be willing to intervene — spending more, borrowing, and creating demand.

In the context of its time, this was a compelling approach and potentially a way to soften severe crises, and Keynes was not proposing an endless system of monetary expansion. After the final separation of the dollar from gold in 1971, however, state-led demand management could operate in an environment where the quantity of money no longer had a direct physical constraint. Central-bank liquidity, expanding public debt, and commercial-bank credit creation became normal tools of economic management. Keynesian thinking still has a major influence on modern economic policy and academia, which is why expansion of the money supply during crises or stagnation is often treated not as a problem of the system, but as one of its ordinary solutions.

The word fiat comes from Latin and means roughly “let it be” or “so be it” — something established by decision or decree. With fiat money, the value of a monetary unit does not arise directly from the physical material it is made from or from the scarcity of that material, but from social agreement, the legal framework, and trust in the system that issues it. Gold’s scarcity is constrained by nature and the physical cost of mining; Bitcoin’s scarcity is constrained by protocol rules, mathematics, and energy-based distributed mining. The euro, dollar, and other modern state currencies instead follow fiat logic: they function as money because the legal and economic system treats them as money and because people accept them as such. To understand how this system emerged, we have to follow the transition from physical assets to promises, from promises to credit, and finally to pure fiat money.

The history of money is of course much longer than the last few centuries and includes barter, shells, polished stones, metal coins, and the tax systems of different empires. For understanding modern banking, however, one of the key developments came when money directly meant gold or silver and people began storing precious metal with bankers and goldsmiths for reasons of safety and convenience. In exchange for deposited metal, they received receipts or IOUs — I owe you — which were easier to use than carrying gold itself. Those receipts gradually began to function as money: they could be used to purchase goods and settle debts. [9]International Monetary Fund (2018), “Cryptocurrencies and the Evolution of Banking, Money and Payments”, a historical account of goldsmiths’ deposit receipts and banknotes.imf.org

This created a new layer of monetary intermediation. Because people did not reclaim their gold after every transaction and preferred the convenience of paper claims, intermediaries noticed that most of the gold remained in vaults most of the time. This made it possible to issue more claims on gold than the amount of physical gold actually held in reserve, forming one of the early steps toward credit creation. A fundamental change had occurred in the nature of money: the gold itself no longer needed to move because promises to gold were circulating through the economy. Money shifted from the asset itself to access to the asset, and eventually the system depended increasingly on confidence that the promised access would remain available when needed.

In the 18th and 19th centuries, Great Britain grew into a global empire and the British pound sterling became the world’s leading money. The pound was linked to gold, while London’s banking system became an important center of international trade; many other currencies were tied to gold either directly or indirectly through sterling. This period is often described as the golden age of the gold standard, yet even this system was heavily intermediated and centralized. Physical gold was concentrated in banks and state vaults while daily economic life relied primarily on banknotes, account entries, and claims on gold. Even a “gold-backed world,” therefore, did not operate as direct gold money in everyday use: it was a hierarchy in which a relatively small number of institutions controlled the base asset while most participants held promises of access to it.

During the 19th and 20th centuries, fractional-reserve banking became increasingly established: banks held only a portion of the monetary claims against them in reserve while the rest of the system operated through credit and trust. Crises, and especially the world wars, put enormous pressure on this monetary structure because states needed far more funding for military expenditure than their existing gold reserves allowed. Vast amounts of money were created during wartime and the connection to gold weakened further. This illustrates why the monetary system is not merely a technical financial topic: the ability to pull resources from the future into the present also allows states to finance military undertakings on an extraordinary scale. Crises repeatedly exposed the same limitation — when the survival or political objectives of the state conflict with the promise to maintain full gold convertibility, it is usually the monetary promise that eventually breaks.

At the Bretton Woods conference in 1944, a new international monetary system was agreed upon. The US dollar was tied to gold at $35 per ounce and other major currencies were in turn linked to the dollar. The United States became the central holder of the world’s reserve currency, supported by its large gold holdings and its post-war economic position. [10]Federal Reserve History, “Creation of the Bretton Woods System”.federalreservehistory.org In practice, this was already a second-order gold standard: most countries no longer had a direct monetary relationship with gold but relied on the US promise to exchange dollars for gold when required. Gold was concentrated in one center while the rest of the world used monetary claims issued by that center.

In 1971, US President Richard Nixon ended the dollar’s convertibility into gold. The United States had expanded the quantity of dollars through the Vietnam War, social programs, and other spending to the point where its gold reserves were no longer sufficient to cover all foreign claims on dollars. Several countries, especially France, began converting their dollars into physical gold; in 1965, a warship was even sent to New York to collect French gold. The more gold left the United States, the more difficult it became to maintain the existing promise. Similar questions about national control over gold reserves still reappear today, for example in Italian debates over the ownership and control of the country’s gold.

Nixon presented the decision to the public as a temporary measure intended to protect the dollar from speculators and stabilize the situation. In reality, it marked the final separation of the dollar from gold and the global beginning of the modern full-fiat era. [11]Federal Reserve History, “Nixon Ends Convertibility of U.S. Dollars to Gold and Announces Wage/Price Controls”.federalreservehistory.org Until then, paper money had retained at least a formal route back to a physical base asset; after 1971, the system rested primarily on trust in states, central banks, and the financial system itself. A step described as temporary became the permanent new monetary order.

Central banks occupy a special position within this history. They are not ordinary market participants, but in most systems they are also not managed directly by the government on a day-to-day basis. Their role is to conduct monetary policy, influence interest rates, manage base money, and help ensure the functioning of the financial system. Institutional arrangements differ: euro-area monetary policy is conducted by the supranational European Central Bank; China’s central bank operates within the structure of the party-state; and the US Federal Reserve is designed as a formally independent institution. Internationally, the Bank for International Settlements in Switzerland plays an important role in cooperation between central banks. The Federal Reserve carries exceptional influence because the US dollar remains the world’s primary reserve currency.

The Federal Reserve was created in 1913 through a process that included the well-known 1910 meeting of politicians and bankers on Jekyll Island. [12]Federal Reserve History, “The Meeting at Jekyll Island”federalreservehistory.org The Federal Reserve System combines public and private elements: its regional Reserve Banks have member banks, important leadership positions are filled through a political appointment process, yet its decisions are not made through direct popular elections. Critics, including G. Edward Griffin in The Creature from Jekyll Island, have portrayed it as a system in which money is created as debt, interest income and influence become concentrated, and risks can ultimately be distributed across the wider public. Regardless of how far one follows that critique, a fundamental question remains: how should society govern institutions whose decisions influence the price of money, the quantity of credit, and therefore the economy as a whole?

Money in today’s fiat system is no longer tied to gold, silver, or any other physical constraint. Its functioning rests on trust, debt, and the system’s ability to sustain continuing economic activity. When the economy slows, the system can be supported through new credit, lower interest rates, public borrowing, or central-bank liquidity; in a deeper crisis, the same instruments can be applied on a larger scale. This creates a structure in which the stability of the system itself increasingly depends on new financial obligations and continued growth. The larger existing debts and commitments become, the harder it is to stop the cycle of monetary expansion abruptly without significant consequences.

Against this background, the idea often appears that the solution is simply to return to the gold standard because gold has served humanity for thousands of years. Yet in large societies gold has historically not functioned without intermediation and centralization: the metal accumulates in vaults while claims against it begin circulating through the everyday economy. It was precisely from this structure that historical systems developed in which the connection between money and gold became increasingly indirect and was eventually removed altogether. A “return to gold” is therefore not necessarily a step forward; it may restore the starting point of a cycle whose eventual outcome we already know. Gold is a valuable precious metal with extraordinary characteristics, but it is not by itself designed to function as sovereign base money for a modern global society.

Estonia’s monetary history reflects the same global evolution in a particularly concentrated form. Because Estonia is a small state, different monetary regimes, political ruptures, and currency changes have reached society especially directly:

• In the 1920s and 1930s, Estonia had its own gold-linked kroon. Tying money to a physical base asset constrained its creation and inflation remained relatively low.
• During the Soviet period, Estonia had no independent currency and the ruble formed part of a broader system of political and economic control. The monetary reforms of 1947 and 1961 changed the terms of money and affected people’s savings, leaving society with a strong experience of how quickly the value of money can change through political decision.
• During the 1992 monetary transition, inflation was extraordinarily high, with price increases exceeding 1,000% in 1992. [13]Bank of Estonia, “Annual Report 1996. Estonian Economy”, table “Inflation against the previous year (%) 1992–1996”.eestipank.ee The period demonstrated how fragile trust in money can become during a monetary and political transition.
• The currency-board system, under which the Estonian kroon was pegged to the German mark, gave the currency an external anchor and helped stabilize prices. [14]Bank of Estonia (2021), “Original designs of the Estonian kroon on display at the central bank museum on the anniversary of the restoration of independence”, covering the 1992 currency reform and the kroon’s peg to the German mark.eestipank.ee By the mid-1990s inflation had fallen below 30% and later moved into single digits.
• Through integration with the euro area and ultimately adoption of the euro, Estonia transferred independent monetary policy into the common euro-area system. Consumer-price inflation communicated to the public has often remained within a few percentage points over longer periods, while M2 money supply has grown considerably faster, historically in the range of roughly 7–10% per year.

• Money began as a direct physical asset: gold or silver.
• It increasingly became a promise to gold, usable without moving the underlying asset itself.
• More promises were issued than could be fully backed, and money became a partially backed claim.
• After 1971, the global system became essentially a pure fiat system, based on institutional trust in central banks, commercial banks, and the state.
• Estonia’s path ran through its own kroon, loss of independence, the ruble, the restored kroon, the currency board, and the euro.
• In today’s system, a large share of usable money is created as debt through credit creation.

It is easy to describe the problem of money creation too simply: the central bank creates base money, commercial banks create credit, and everything depends on whether decision-makers make good or bad choices. From that perspective, the solution can also seem simple — elect better politicians, change a few rules, and the system is fixed. But over time, the monetary system has become far larger than the mechanism of money creation itself. Around it have grown banks, payment systems, bond markets, collateral structures, settlement networks, funds, intermediaries, insurance, regulation, and supervision. Every layer has a reason and a function, yet taken together they form a vast system in which a significant amount of activity is devoted simply to moving money, intermediating it, and balancing financial risks.

The monetary system can therefore lose energy on several levels at once. Creating new money dilutes the share represented by existing money within the whole, but the pressure to create new money does not arise from nowhere. Large government expenditures, growing social obligations, military spending, servicing existing debt, and maintaining an increasingly complex financial system all require resources. The larger the system becomes, the more energy is consumed simply to keep the existing structure operating. Money creation is therefore not only an isolated cause of monetary dilution; it is also one of the tools used to finance an increasingly heavy system.

The more interconnected the layers of the system become, the harder it is to change one part without affecting the others. Money creation, interest rates, and regulation depend on political decisions, while banks, funds, and other large organizations operate according to their own economic interests. Around them sit government budgets, pension systems, corporate financing, property markets, and people’s savings, all of which in turn depend on financial stability. An enormous political, institutional, and corporate ecosystem has therefore formed around money, and it cannot be understood or changed through a single lever.

This makes the problem much larger than a simple question of the “money printer.” Even when decisions are made by competent people with good intentions, the complexity, obligations, and interdependencies of the system remain. At some point, reforming one component becomes difficult precisely because so many other institutions, contracts, assets, and interests are attached to it. The map of the US dollar system below gives a useful visual sense of this scale. It does not need to be read box by box; the important thing is the whole. Money, which could primarily serve as an independent intermediary of value, has over time grown into an enormous system that requires substantial resources simply to keep itself running.

The monetary system will not remain in its present form forever, and several possible new paths are already developing in parallel. They are often grouped together under labels such as digital money or financial innovation, yet their underlying logic can be fundamentally different. One solution may make the old system technically more efficient, another may expand the reach of existing fiat money, while a third attempts to change the architecture of money itself. It is therefore essential to distinguish a new user interface from a new monetary system — otherwise the old structure may simply continue under new technology and new language.

Europe is developing a digital euro, while China’s digital yuan is already in real use. [15]European Central Bank, “Progress on the digital euro”.ecb.europa.eu In both cases, the technical form of money changes while its underlying logic remains fiat-based: the money is still centrally issued and centrally governed base money. The European and Chinese models differ in their institutional structure — the euro area emphasizes the role of an independent central bank, while in China the monetary system sits more directly within state governance — but in neither case does the money supply become an inherently scarce resource. Central-bank digital currencies are being researched or developed around the world, and the Atlantic Council tracker has at different points included 137 countries and currency unions. [16]Atlantic Council, “Central Bank Digital Currency Tracker”. The figure of 137 in the article’s chart reflects an earlier point in time; the number on the tracker may change.atlanticcouncil.org

Stablecoins are digital forms of money whose value is usually linked to an existing fiat currency, most often the US dollar. Their innovation lies primarily in the transfer layer: dollar-like value can move globally, quickly, and relatively cheaply across blockchain-based networks. Monetarily, however, this does not automatically create a new form of base money, because a dollar-denominated stablecoin remains dependent on the dollar and the financial system behind it. Large stablecoin issuers hold reserves that include US government debt, thereby creating additional demand for dollar-based assets. [17]Bank for International Settlements (2026), “Anchoring trust in money: innovation beyond stablecoins”, a discussion of the reserves backing dollar-based stablecoins.bis.org From this perspective, stablecoins do not dismantle the existing fiat system; they can make it more global, more programmable, and extend its reach.

Bitcoin is the first widely functioning technological alternative whose monetary-supply rules do not depend on a central bank or a government decision. Its maximum supply is limited by protocol to 21 million bitcoin, and each bitcoin can be divided into 100 million smaller units called satoshis. [18]Bitcoin.org, “Bitcoin Halving”, an explanation of the limited supply.bitcoin.org The network is maintained through distributed consensus and energy-based mining, which means no central participant can simply expand the money supply according to need. This creates a fundamentally different base-money logic: the money is not born as someone else’s debt, its scarcity does not depend on a political decision, and using it does not require trusting a single central issuer. In this sense, Bitcoin is not merely a new payment method but an alternative monetary architecture.

The existing system works the way it works, and demonizing its participants does not help us understand it. Within a debt-based monetary system, central banks, commercial banks, governments, and financial institutions perform functions without which the existing structure would rapidly destabilize. The question is therefore not how to switch the entire system off tomorrow, but how to prepare gradually for a transition toward stronger foundations. At the individual level, this begins with recognizing that the Consumer Price Index may not capture the full dilution of monetary value and that changes in the money supply are also worth considering when evaluating savings and investments. Gold, for example, has reflected the expansion of Estonia’s money supply over the past twenty years far better than simply holding cash.

Gold therefore remains important as a store of value and is in many ways an extraordinary element, but global base money requires characteristics for which physical gold is not particularly well designed. Holding and moving it inevitably requires vaults, intermediaries, and trusted institutions, and that is precisely where the historical path from gold to claims, banknotes, and eventually fiat money began. At the collective level, we therefore face a question far more fundamental than which asset to invest in: what kind of monetary system do we want to build for the next generation? The money of a new world must incorporate both the lessons of monetary history and the possibilities created by modern technology.

Money is a store and transmitter of human work and energy. When it functions well, it allows value to move across time and space, enables cooperation between people who do not personally know one another, and allows the work of today to be directed toward future goals. But when money’s value is continuously diluted, or when its operation requires ever-increasing amounts of debt and intermediation, part of the energy stored in it is consumed by the maintenance of the system itself. The quality of money is therefore not an abstract financial question: it affects how much our work will be worth in the future, how wealth moves between generations, and what decisions people are forced to make throughout their lives.

Independent and honest money would be a tool whose primary purpose is to serve its users rather than force them to compete continuously with the system simply to preserve the value of their money. We have not yet reached such a monetary architecture, but understanding the present system is not a reason for panic or confrontation. On the contrary, it gives us the ability to see the system more clearly and make more informed decisions. Money creation should not be specialist secret knowledge or the highest level of economic education. It is basic monetary literacy — a foundation from which a much clearer discussion about economics, politics, and our shared future can begin.

Understanding money creation leads to the next and even more fundamental question: what is money itself, and what role should it play in the development of individuals and society? How do we want to store the value of our work and energy, how do we cooperate directly with one another, and how can we create money that is as independent, honest, and resilient as possible? Different forms of money are not merely different technical systems; they reflect how we relate to value, security, power, cooperation, and freedom. The evolution of money is, in this sense, also a mirror of the evolution of people and society. To explore that broader picture in greater depth, EFTI has created 9D Money, which brings the development of money, the individual, and humanity onto a single map. [20]EFTI, “9D Money”.efti.org