Contemporary monetary systems are made up of fiat currency. Instead of deriving its value from commodity backing, it is set by supply and demand and people's faith in its worth.
With the creation of double entry accounting in the late 1400s, we saw ledger-based money evolve. This has been done throughout history by private entities. They were the money creators, using credit on ledgers as money. This helped to alleviate issued with coin money.
Fiat money came into being since gold could not be mined fast enough to keep up with a booming economy. It depends upon people's perception. An economy that is growing shows that it is producing other things of value.
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