How do you start a currency system?

Question

Suppose hypothetically, 10,000 people were marooned on a fertile bountiful secluded island and in time they had all occupied their own plot of land and become: farmers, planters, fishermen, miners, foresters, builders, printers and other service personal and manufacturers. They then agreed to form a government and create a reserve bank. Bearing in mind that there would be privately owned supplies of gold, silver and paper on the island, how would the newly elected Reserve Bank Chairman create the monetary system? Specific answers please on what he/she would actually do (!), rather than generalisations about GDP, confidence in the currency system etc., etc.

Answer 1

Your question assumes that it would be possible to centrally plan a currency system in the setting you've designed. I'd argue that it probably wouldn't be possible to print up currency from nothing and convince people to use it. The only realistic system would be something backed by commodities such as gold, silver, etc. And, in this setting, the Reserve Bank chairman would be useless, because such as system would develop naturally, without any centralized planning. People would develop the trading system that worked best for them.

Further, in this modern age, I suspect paper currency wouldn't develop at all. If this economy didn't do the simplest thing like utilizing currency from a nearby nation, or the stablest thing, like using gold/silver, it would probably develop a sort of credit system where a database of transactions would be entered into ATM's or terminals or something. The point is, none of this requires this Reserve Bank Chairman to do anything. What exactly is his purpose, and why did we hire him before we figured out what kind of currency system we'd have?

Answer 2

note enough people it would be over run by some county with 6million people, what if they became sick where is the doctor getting his medicines, it would be like the deserts of Africa, money is a small part of starting a world, many other factors your leaving out, what will the kids do what do you teach them do you have a air port, and law what if the people did not get along people never do, just a nice dream tho