But where does it come from in the first place? There is a popular misconception that the wealth of the world is underpinned by great bars of gold in the vaults of the Bank of England, the Federal Reserve and Fort Knox. Not any more it isn't.
There is still gold in the vaults, and it is still shifted from cage to cage - each one assigned to a different world government - rather than shipped round the world. But that's an historic anomaly and a simple way of storing some of the nation's reserves. Central banks actually spent most of the 1990s trying to sell off their gold reserves surreptitiously without lowering the world gold price. (They failed.)
Actually, the pound hasn't been backed by gold since 1931 at the height of the Great Depression, and the final link between money and gold was broken in 1971 when Richard Nixon finally ended the pretence that the US dollar had gold backing. Now if you read the 'promise to pay the bearer on demand' message on your £�5 note and you take it to the Bank of England, they will simply give you another £5 note in return.
Of course there are coins, but these are made of cupro-nickel and are no longer worth anything like the 10p or 50p on the front. The total value of notes and coins produced by the Royal Mint and issued into circulation by the Bank of England and its equivalents is only a tiny 3% of all the money in circulation.
