Creating Monetary Systems


We sometimes need to understand how commerce works so we can show it with confidence. Two occasions are if we intend to show any transactions, or what characters need to do to acquire something they need. Without understanding how much an item costs, audiences have less understanding of characters’ actions. Are four hours of chopping wood enough to earn a meal, or a rip off? Glossing over it is an option, but showing it adds believability. Writers can experience starting to show a transaction because it feels natural given the unfolding scene, but then hesitate to depict the amount of money being exchanged. Working out commerce solves this.

But sometimes we don’t need it. We don’t need details on how commerce works to show whether someone is rich, poor or in between. Audiences accept that this happens in society. It’s optional to say their job is well or poorly paid, or they inherited wealth, or another factor, but not required. And if we’re writing a story where everything is free, or we have a society so barbaric that even trading one thing for another doesn’t happen, it won’t matter.  Otherwise, read on to learn how to determine commerce.

A Monetary System

One challenge of writing stories not taking place on Earth is that we can’t say characters are paying with dollars, Euros, or bitcoins. We need a monetary system or to ignore currency altogether. It’s standard in fantasy to use metal—platinum, gold, silver, copper, and iron coins—but gems and paper options exist. In SF, we can go with “credits” to keep it simple, even if we call it something else.

The money from a kingdom can and likely will have words and symbols on them, with characters reluctant to use those coins or bills at certain times if they might offend the receiver. Such items can be used to identity where they’ve recently been, too, though this is prone to misunderstanding; just because we have a coin from a kingdom doesn’t mean we’ve been there; but this depends on whether the item is a unit of weight or of value, as explained next. A unit of weight, such as a measured piece of gold, can be freely traded across kingdoms so that a coin could be in circulation anywhere and we just happened to get it in our last exchange, but a unit of value is specific to a sovereign power and therefore, possessing it does suggest we’ve been there. An example: if I have a Canadian dollar, I’ve probably been there, but if I have a gold piece from Canada, the value of gold transcends borders and doesn’t mean I’ve been there. I can’t use the Canadian dollar outside Canada, but I can use that gold piece; that it was minted in Canada means nothing, unless they have a reputation for dishonesty and/or the weight is off.

Units of Weight or Value

Money is either a unit of weight or unit of value. For example, paper money has no actual value except for the denomination printed on its surface, which spells out its value. Therefore, bills are a unit of value. On the other hand, the amount (or weight) of gold determines its value, even when fashioned into a coin. Metal is a unit of weight—but not always, because metal can have a value stamped onto it, rendering its weight irrelevant.

In media, we’ve seen someone handed a coin and then bite it to see if it’s really made of the material that it appears to be, like gold, or whether it’s only gold-plated. Alternatively, it may be placed on a scale. These matter when the coin is a unit of weight. But it could also matter with coins (of value) if two denominations are the same size. One could be stamped with the value of the other, in theory (counterfeiting). This may influence coins of different values having distinct sizes, but that is done partly to make identification and usage easier. Weighing on a scale can also lead to cheating if improper counterweights are used. These factors can contribute to units of weight falling out of favor in more advanced, established societies.

When a government collapses, so does the value of its currency when it is a unit of value. That $100 bill in our hand may now be worth zero if its value was backed by a now defunct government. By contrast, gold is gold. Like other metals (or gems), its value is based on rarity in the world rather than by a sovereign power, and this seldom changes much if at all, which is why, on Earth, it’s considered a safe investment—it is largely immune to the impact of a government’s collapse. One reason to care about this is that a character who doesn’t believe a government will last is unlikely to visit a bank, hand over his gold (a unit of weight) in exchange for bills (a unit of value), and walk away feeling safe.

Doing so seems less likely in fantasy due to the less robust governments that may exist. This robustness, or lack thereof, impacts everything, including police for those robberies, laws and courts to punish offenders, and accountability, which government provides to ensure people believe their state will take care of them and that institutions like banks and other infrastructure work. But if we have an empire, a constitutional monarchy, or a long-established state (over a hundred years), the state may insure banks (just like modern ones on Earth) so that people trust them. This way, even if the bank is robbed, you’ll still get your money because that bank is liable for the theft.

In SF, the advances in technology (and cooperation) that make activities like space travel possible are likely predicated on sophistication that matches or rivals that of modern-day Earth. Units of value are more likely than units of weight. A collapsing government can cause a rush on financial institutions to transfer that money to an institution in a stable, foreign country, before the value is zero. These people can be gouged by unscrupulous nations or banks who know what to do with desperate people. This can be an excellent way to create a now poor character with a backstory in wealth.

If units of weight are still in use, there’s another complication in SF: the value of an ore like gold is based on its rarity. Discovering a new planet where a valuable ore is far more abundant can throw an economy into disarray as the value of that ore plummets. This is what typically happens when a new gold deposit is found: the value of all existing gold drops because greater abundance renders it less valuable. This should be a genuine fear of anyone whose fortune is in precious metals or gems. It’s easy to imagine that person being opposed to space exploration – unless they think they can control how much of that ore, found on another planet, makes it to them. If that new planet has civilizations on it, both economies could be disrupted. It’s unlikely that the planets have the same composition (or even extraction capabilities). It’s also unlikely that a single ore will be different in rarity. While economics isn’t a subject that excites, the potential financial disruption that newly discovered planets bring has been successfully overlooked by countless world builders who don’t want to worry about it, and audiences accept it because they haven’t thought about it, but we should. The introduction of germs and parasites between these two worlds has been featured more often.