When people first started trading they bartered goods;But then they found that they could use precious metals like Gold and Silver.
This developed into Gold and Silver coins but there were not enough of these metals and they needed smaller coins . So we used non precious metals.
Then (although the Chinese had already done so) they found that Paper Money could take the place of Gold and Silver..
But in order to convince us the Paper Money was worth the same as as a Gold coin this however led to the Chief Cashier having his signature on the Bank of England notes, it says “I promise to pay the bearer of this note five,ten pounds etc ”.
In the days when most major currencies were tied to the gold standard and you could in theory to be able to go to a bank and ask for gold in exchange of the notes.
The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. There are distinct kinds of gold standard. First, the gold specie standard is a system in which the monetary unit is associated with circulating gold coins, or with the unit of value defined in terms of one particular circulating gold coin in conjunction with subsidiary coinage made from a lesser valuable metal.
Similarly, the gold exchange standard typically involves the circulation of only coins made of silver or other metals, but where the authorities guarantee a fixed exchange rate with another country that is on the gold standard. This creates a de facto gold standard, in that the value of the silver coins has a fixed external value in terms of gold that is independent of the inherent silver value. Finally, the gold bullion standard is a system in which gold coins do not circulate, but in which the authorities have agreed to sell gold bullion on demand at a fixed price in exchange for the circulating currency.
Now of course the Majority of deal in this currency but more and more often we don't even see it when we commit our transactions electorally to such an extent some have predicted the end of hard currency altogether and people just use credit or debit cards. But they will probably be confident that thier money will not disappear from their account even if its no longer hard currency.
So it is sill "money" (albeit in a different form) in our banks
But is it Real Money in Places like the City of London?
When we see "billions written off in losses" where has it gone?
The fact is that in many ways what these Inner Traders like the latest ones involving arclays’ Traders speculating on movements in interest rates were manipulating Libor in an effort to make huge profits.
Its traders were conspiring with the ‘submitters’ at the bank which lodge their Libor rates every morning. Depending on the way they were betting, traders would urge these submitters to increase the Libor rate ( The London Interbank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. It is a benchmark, along with the Euribor, for interest rates all around the world.or lower it)
Barclays’ traders conspired with ex-employees working at other banks to try to influence their Libor submissions. During the financial crisis Barclays also fiddled the figures to dupe the market into thinking it was more financially sound than it was.
Libor is often seen as a barometer of how healthy a bank is. Just as customers with bad credit records have to pay higher interest rates, banks which are deemed in poor financial health are charged more to borrow.
Barclays became anxious that its Libor rate was higher than many of its peers and that they were fiddling the figures. It decided to join the party.
But there was never any hard money transferred . Arguably it was Imaginary Money Its not in Gold Goods Housing etc. To these trader it just numbers except for their bonuses for playing with these numbers.
Nearly every Government have allowed these people to play with these "Imaginary Numbers " until someone starts questioning them and Billions then vanish . (although they were never really there in the first place).
Its like going to the Bookies and betting .on the promise that you will one day pay . As long as you are winning no one notices that you haven't really put any money down . But eventually you start losing, but you carry on placing bets until the Bookie calls time and sends the heavies around to take your house and goods.
We can't go on basing our economies on just numbers and imaginary money. We can't really go back to the Gold Standard. (Unless the system collapses completely ) We need to place controls on this type and other forms speculation so it is at least visible to regulators.
Some greedy banker in the City of London should not be able to ruin the lives of ordinary people who see their assets in their Land or Home or other visible assets rather than Imaginary Money though they could lose their assets because the imaginary money is no longer there.