Through its perfect strategic situation for trade and defence Byzantium/Constantinople has been a natural trading centre for 2,500 years. After its foundation it rapidly assumed the high level of economic sophistication necessary for ancient civilisations to adopt representative money systems.

It learnt from Ionia and made sure its iron based currency was at the forefront of the technology of the time - which made it difficult to counterfeit. However the central authority of Byzantium as a city state decayed amid an unwillingness to generate public resources through taxes, and public belief in the value of these iron tokens evaporated as they were issued in large numbers to pay for public works.

The state later privatised its monetary operations by granting a statutory monopoly on money production to a bank. This bank used gold in its coins, which limited the problem, but they were still overvalued, and although an increasing gold content was deployed it failed to stop counterfeiting and smuggling until monetary circulation returned to a gold base as an intrinsically valuable money.

The iron tokens faded away into valueless disrepute through their own lack of creditworthiness, a result of state sponsored fiscal indiscipline.

Paul Sustain

Director and Founder

Bullionvault.com