Money is something most of us handle every day without a second thought. We earn it, spend it, save it, and trust that it will hold its value. But behind the coins and notes lies a long and often contentious history of who controls money, and why. In Australia, that history tells us less about technical necessity than about political power.
In the late 1800s, banking in Australia was unstable and often reckless. Dozens of private banks operated, each issuing their own notes. Credit flowed freely into booming property markets, until the crash of the 1890s triggered a wave of failures. More than 50 banks and building societies collapsed, wiping out savings and leaving farmers and workers in despair. Poets like Banjo Paterson gave voice to the bitterness, writing of rural families ruined by foreclosure. For many Australians, private banks had shown themselves to be untrustworthy custodians of money.
That distrust opened the door for a new model. In 1910, Parliament passed laws that stripped private banks of the right to issue notes. A punishing ten percent tax made private currency impossible to maintain. From that moment, only the government could issue legal tender. The following year, the Commonwealth Bank of Australia was established. It was sold to the public as a “people’s bank” – a safe, government-backed alternative to private finance.
Opportunity Strikes
When the First World War broke out, the new Commonwealth Bank quickly became the government’s financial arm. From 1915 onwards it organised ten separate war loan campaigns, raising the enormous sum of £250 million between 1915 and 1921 (~A$40 billion in today’s dollars). Governor Denison Miller himself declared that the Bank was “practically controlling the finances of Australia” during the conflict. Committees were set up in towns across the country, posters and rallies urged citizens to subscribe, and even public spectacles – like a full-scale replica of a navy destroyer – were used to encourage bond sales. For Australians, buying bonds was framed as a patriotic duty; for the State, it was a way to fund war without having to raise equivalent taxes. The Commonwealth Bank’s transformation into the government’s war chest revealed the deeper logic of monetary monopoly; once the State controls money, it can mobilise vast resources at speed, with the burden ultimately borne by citizens through debt and inflation.
Over the decades that followed, the Commonwealth Bank grew into a central bank in all but name. After the Second World War, new laws gave Canberra sweeping influence over credit and monetary policy. The decisive shift came with the Reserve Bank Act 1959, which created the modern Reserve Bank of Australia. The Act gave the Bank the appearance of independence, yet it contained a crucial clause; if the government and the Bank ever clashed, the Treasurer could issue a directive and the Bank was legally bound to obey. This “Section 11 override” has never been exercised, but its presence makes the hierarchy clear – monetary authority ultimately remains subordinate to political authority.
By 1960, reformers decided the dual role of the Commonwealth Bank was no longer workable. Central banking responsibilities were transferred to the new Reserve Bank of Australia, while the Commonwealth Bank continued as a commercial lender. The RBA was tasked with managing monetary policy and issuing currency, while the CBA evolved into a profit-driven retail bank and, by the 1990s, was fully privatised. From its origins as a government-owned “people’s bank,” it had become one of the Big Four – a transformation that reflected the broader consolidation of power in Australia’s financial system; from promises of public service to the realities of state sanctioned centralised power and private gain.
The 1970s tested the RBA’s authority. Oil shocks, inflation, and volatile trade flows made defending fixed exchange rates a losing battle. Australia pegged its currency first to the pound, then to the US dollar, then to a basket of currencies, but each peg collapsed under pressure. Billions were spent defending the dollar, while speculators bet against it. By December 1983, Treasurer Paul Keating cut the cord. The dollar was floated, allowing markets to set its value. This was hailed as a landmark reform, freeing monetary policy from the burden of defending an artificial peg. Yet it also served another purpose; it gave government greater flexibility to expand or contract money and credit without external limits. The machinery of inflation remained intact.
The result of this long evolution is visible to anyone who looks at prices over time. In 1966, when Australia decimalised its currency, $100 could buy what today requires around $1,600. In other words, the dollar has lost about 94 percent of its purchasing power in less than sixty years. For governments, this erosion made debts easier to manage. For ordinary Australians, it meant that wages and savings bought much less with each passing decade.
For curiosity’s sake, let’s take this comparison further by expressing wages in gold. In late 1971, archival tables show low adult award rates around $45–$46 per 40-hour week in several basic classifications, with most awards using a 40-hour standard week. At the same time, the average 1971 gold price was about US$40.80/oz, and the AUD traded near US$1.12. Converting that gold price into Australian dollars puts gold at roughly A$36–A$37 per ounce in 1971, so those low award wages equated to about 1.20–1.26 ounces of gold per week. Using ~2025 prices (gold ~US$3,749/oz; AUD/USD ~0.654–0.659), that gold-denominated wage implies roughly A$6.9k–A$7.2k per week, or about A$172–A$180 per hour. It must be noted that award rates did differ by industry, gender and state, and any gold conversion relies on historical exchange rates, but the broad point holds true; against a hard store of value like gold, the dollar’s long slide is stark.
Monetary Mechanisms
Behind this systemic inflation sits an institution few people know about: Note Printing Australia (NPA). Based in Victoria, NPA is the factory that produces the country’s polymer banknotes. It is a wholly owned subsidiary of the RBA and the practical arm of the money monopoly. On the surface, it looks like a model operation; pioneering durable polymer notes, recycling manufacturing waste, and supplying secure banknotes to dozens of other countries, such as New Zealand, Singapore, Kuwait, Mexico, Romania, and more. But its history shows the risks that come with combining government ownership, monopoly power, and commercial ambition.
Between 2009 and 2018, NPA and its sister company Securency were embroiled in a bribery scandal. To win contracts overseas, executives conspired to bribe public officials in Indonesia, Malaysia, Vietnam, and Nepal. Both companies pleaded guilty and were fined more than AUD $21 million. The scandal exposed the hazards of a government-backed entity chasing profits abroad, shielded by public ownership but driven by commercial incentives. It also risked funnelling funds into corrupt networks abroad, even as it eroded trust at home.
Other concerns remain. Producing polymer notes requires global supply chains for inks and specialised materials, some of which originate in regions with poor labour standards. While NPA publishes statements about human rights and sustainability, complex procurement networks make it difficult to guarantee clean hands. Costs have also risen sharply too. For example, materials jumped 22 percent in 2023–24 alone – but with no competitors, inefficiencies are absorbed into the Reserve Bank’s accounts, and ultimately borne by the public (you).
Make Incentives Great Again
Today, the banking sector continues to benefit from its alignment with the Reserve Bank and government policy. Commercial banks create the majority of new money in the form of credit, much of it directed into property lending. This has helped inflate housing markets to dizzying heights; a “property ponzi”, so to speak, that boosts bank profits while leaving households carrying ever larger debts. It is a modern echo of the same dynamic we’ve seen throughout history – banks and the State working hand in glove, while ordinary Australians bear the long-term cost through debt, inflation, and declining purchasing power.
Bitcoin offers a radically different model. Instead of a central authority printing notes or expanding credit, Bitcoin is governed by code and secured by a global network of independent participants. Its supply is capped at 21 million coins, making inflation by political decree impossible. Transactions are verified by consensus, not by government fiat, and the ledger is open for anyone to audit.
Where traditional money erodes quietly over decades, Bitcoin’s value proposition is rooted in scarcity, transparency, and independence from political control. In this way, it restores what Ludwig von Mises called sound money;
a money that protects savings, limits government overreach, and returns power to individuals.
Central banks are often presented as guardians of the economy, neutral and above politics. Yet history shows they exist first and foremost to serve the needs of government. Money, once monopolised by the State, becomes an instrument of policy rather than a neutral measure of value. That arrangement may suit Canberra, but for ordinary Australians it has meant a lifetime of rising prices, eroded savings, and a dollar that buys less and less with every generation.
Bitcoin offers a way out.
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