Part 1 of 8: The case for the singleness of money
In a speech to Parliament in 2024, Andrew Bailey, Governor of the Bank of England, made a statement that should have alarmed every economist, policymaker and financial professional in the UK. He didn’t make headlines. He didn’t trigger emergency meetings. Instead, his words were filed away in the archives of central banking wisdom, largely ignored by the very people who should have been listening most carefully. Bailey said something that contradicts everything Silicon Valley is trying to build. He said something that challenges the entire premise of agentic US dollar. He said something that, if understood properly, reveals why the current trajectory of digital currency innovation is fundamentally incompatible with a functioning economy.
He spoke about how money must be singular. Not in those exact words, of course. Bailey speaks in the measured tones of a central banker, carefully hedging his statements with qualifications and caveats. But the underlying principle is unmistakable. A monetary system cannot function if it is fragmented into competing currencies with different yields, different settlement speeds and different economic properties. Moreover, this is not a controversial statement - it is, in fact, the foundation of modern monetary theory. It is why central banks exist; it is why nations have currencies; it is why the Bank of England has spent 330 years since it was established in 1694, enforcing the principle that there is only one pound sterling and not dozens of competing versions. Yet today, that principle is under attack, and the attackers are not foreign powers or rogue states. They are technology companies, venture capitalists and financial innovators who genuinely believe they are improving the monetary system and banks themselves. They are creating different types of payments - some with and some without a yield. They are building blockchain-based currencies that settle instantly and can do so 24/7 - i.e. no longer confined to the traditional banking working day. In doing so, they are potentially fragmenting money into a thousand competing variants but speeding up the velocity of money itself. And Bailey knows it’s a disaster.
Sir Issac Newton who used technology to save the pound
Source: X
The problem: money requires singularity
Let’s start with a simple question: what is money? After all, economists have debated this question for centuries. Yet there is one characteristic that all forms of money must possess: singularity. Money must be one thing - it cannot be two things at once. This is not a philosophical statement; it is a mathematical one because money serves three primary functions:
1. medium of exchange - you accept it in payment as you know others will accept it.
2. store of value - you hold it because you believe it will retain purchasing power.
3. unit of account - you use it to measure prices and compare values.
But here’s the critical insight: these three functions are in tension with each other. If money is a good store of value, people will hoard it (hold it rather than spend it) and therefore this reduces its effectiveness as a medium of exchange. If money is an excellent medium of exchange, people will spend it rather than hold it and therefore this reduces its effectiveness as a store of value. Hence, this tension is resolved through a principle that economists call the “velocity of money.” Money must circulate at a relatively uniform rate - that is, if all units of money circulate at the same speed, then the tension between store of value and medium of exchange is manageable.
The yield problem: when money becomes an investment
Imagine that the Bank of England has issued two types of pounds:
Type A: Regular Sterling
· no yield
· settles instantly
· used for everyday transactions
· velocity: high (spent quickly)
Type B: Yield-bearing Sterling
· 5% annual yield
· settles in 24 hours
· used for savings
· velocity: low (held, not spent)
Now, imagine that both are accepted as legal tender. What happens? Gresham’s Law tells us: “Bad money drives out good money.” But in this case, “bad” means “low-yield” and “good” means “high-yield.” Potentially corporations and individuals would hoard Type B (the yield-bearing version) and spend Type A (the regular version). With this in mind, let’s now trace through a concrete example: suppose you’re the Chief Financial Officer of a major UK corporation and you have £10 million in cash that you need to hold for operational purposes. You can either:
· hold it in Regular Sterling earning 0% yield
· hold it in Yield-bearing Sterling earning 5% yield
The choice is obvious. You move your £10 million to Yield-bearing Sterling. At 5% annual yield, that’s £500,000 per year in additional revenue. Why would you not do this? But now consider what happens across the entire economy. If every corporation, every institution, every individual with discretionary cash makes the same decision, then Yield-bearing Sterling gets hoarded and Regular Sterling gets spent. Hence, this creates a bifurcated monetary system where you have two different monies with two different economic properties - the central bank loses control of the money supply, interest rate policy becomes ineffective, tax collection becomes impossible and the banking system comes under immense pressure. This is not theoretical and is not a hypothetical scenario. This is potentially what some fear may happen when the US GENIUS Act is inevitably modified to allow yield pass-through on stablecoins - a change that regulators and industry observers expect within the next 18-24 months as pressure from US dollar stablecoin issuers mounts.
The velocity crisis
When money bifurcates into competing yields, velocity becomes unpredictable and it is one of the reasons that a number of central bank models, including the Bank of England’s core forecasting platform, COMPASS, have moved away from relying heavily on a stable velocity of money. The challenge is with competing yields, meaning velocity becomes chaotic - high-yield money is held (low velocity), low-yield money is spent (high velocity), the average velocity becomes unpredictable and hence the central bank’s model come under pressure. Furthermore, consider inflation targeting - the Bank of England targets 2% inflation where this target is based on the quantity theory of money: MV = PQ, where M is money supply, V is velocity, P is price level and Q is quantity of goods. If the central bank knows M and V, it can predict P (inflation). But if V becomes unpredictable because of competing yields, the entire framework collapses. The central bank might think it’s controlling inflation, but it’s actually flying blind.
Why Andrew Bailey is right (and why nobody listens)
Bailey has been warning about this for years. In his speeches, he has consistently emphasised the need for monetary singularity and that the central bank must maintain control over the money supply. Bailey is absolutely correct, but the problem is that he is fighting against technology. And technology, as we will see in this series, always wins. Moreover, Bailey’s warnings face a credibility problem - the financial industry has successfully framed stablecoins, CBDCs, tokenised money market funds and tokenised deposits as “innovation” and “progress.” Anyone who warns against them is portrayed as a Luddite, a technophobe or someone opposed to financial inclusion. But Bailey isn’t opposed to innovation. Indeed, in a recent speech he acknowledged the “potential benefits of digital technology to payments, for instance so-called programmable payments – ‘money with instructions’”. He’s warning about a specific problem: monetary fragmentation. And that problem is real, even if it’s unpopular to discuss. The other major challenge all central bankers face is the ability to track some of these digital payments, especially stablecoins since they move in amount of their respective economies. Currently, there is no means for central banks for or governments to monitor the quantity of stablecoins being withdrawn or deposited in their jurisdiction.
The historical precedent
There is a precedent for this problem, and there is a precedent for the solution. In 1696, the British monetary system faced a crisis. Coins had been “clipped” (physically cut to remove precious metal) and the problem was so great that almost half of the face value of coins in circulation no longer represented the metal content whereby leading to the currency being debased. The economy was in chaos - there were two types of coins in circulation: clipped coins (bad money) and full-weight coins (good money). Gresham’s Law was in full effect - full-weight coins were hoarded and clipped coins circulated. The solution came from an unexpected source: Sir Isaac Newton, the greatest mathematician and physicist of his age, was appointed Master of the Mint in 1696. Newton understood something that most people didn’t: the problem could be solved through technology. Newton introduced “reeded” coins - coins with ridged edges that made clipping impossible to hide. These coins were so technologically superior to clipped coins that they immediately became the only acceptable form of currency and within months, clipped coins disappeared from circulation. Thus, Newton used technology to enforce monetary singularity. But here’s the twist that we’ll explore in next week’s article: the same technology that once enforced singularity is now destroying it.
The central banking paradox
This reveals a fundamental paradox in central banking. Central banks have always relied on technological superiority to enforce monetary singularity. Newton used reeded coins, modern central banks use digital signatures and cryptographic verification. But now, the technology that was supposed to enforce singularity is being used to create fragmentation. Blockchain technology allows anyone to create competing currencies - cryptographic verification allows multiple issuers to create competing stablecoins. The same tools that central banks used to enforce control are now being used to undermine it. This is the core problem that Bailey is grappling with; the technological foundation of monetary control has been inverted. Technology that was once a tool for enforcing singularity is now potentially becoming a tool for creating fragmentation.
What comes next?
This series will explore a paradox at the heart of modern monetary policy. It will show how Andrew Bailey’s arguments for monetary singularity are theoretically sound but practically impossible to implement. It will demonstrate how technology has made singularity obsolete. But first, we need to understand the historical precedent; we need to understand how Newton solved the problem of competing currencies; and we need to understand why his solution, elegant as it was, cannot work in the digital age. Next week: “They clipped the coins: Newton’s Great Recoinage and the birth of trusted money”. We will examine the Great Recoinage of 1696 in detail. We’ll see how Newton’s technological solution enforced monetary singularity for 330 years and we’ll begin to understand why that same technology, the power to create superior money, is now creating the opposite problem.
Series Overview
Andrew Bailey, Governor of the Bank of England, has warned repeatedly about the dangers of monetary fragmentation. This series explores whether his warnings came too late.
This is Part 1 of an 8-part series exploring “The case for the singleness of money”. Each week, a new article will build on the previous one, exploring why monetary singularity is essential, why it is being destroyed and what comes next.
Coming in this series:
Part 2: Newton’s great recoinage and the tax acceptance mechanism
Part 3: Why yield-bearing bonds could never be money (the technical barriers)
Part 4: How the GENIUS Act proved Gresham’s Law in real-time
Part 5: Why yield-bearing money destroys the banking system
Part 6: How tax payments became the ultimate monetary weapon
Part 7: The agentic USD threat to sterling sovereignty
Part 8: The twisted ending: why singularity is dead
*Jonny Fry is a director of London Digital Escrow
This article first appeared in Digital Bytes (21st of July, 2026), a weekly newsletter by Jonny Fry of Team Blockchain.