The coins jangling in our pockets and the paper furled in our wallets, feel to their bearers like a commodity which can be exchanged for other commodities, as if they had value-in-themselves. And in a very practical sense, if not in a legal one, we do own they money in our pockets. But most money is not in the form of cash but in the form of bank deposits, which is something else entirely. As with money, we need to know who has the right to create bank deposits, and who gives value to bank deposits, by what law banks are allowed to subtract them from our accounts, and how transaction charges can be so high 6 years since the invention of blockchains. Bank deposits behave much less like a commodity than money - it is created from nothing as a liability, it is always owned by the bank and can only move within a legally defined infrastructure. The balance in my account is merely the promise of the bank to give me cash if it is able, and if it wants to. The 97% of modern money which is bank deposits is privately owned in the sense that it is issued at the discretion of, at a price determined by, and for the profit of, private banking institutions. But banks do not only store money and earn rent on credit issued ex nihilo. Banks also perform the other function of money which is making payments, and earn vast sums from doing so. Moving money is as simple as debiting one account and crediting another. We can see how this works in Western Union where cash is paid in office and paid out of another office in another country moments later. It is clear the actual money wasn’t transferred between franchise outlets, only the promise of it. All banking networks and within banks are working with these promises, of money, of gold, of other promises.
Note that a ledger entry does not cause real money to change hands. The ledger’s unit of account is a virtual money or a promise to pay ‘real money’. For that reason, in banking, ‘pay’ means the same as ‘promise to pay’ or ‘transfer a promise to pay’. A ledger, in the sense that I mean it, is merely a list of transactions between accounts. Because every transaction is a subtraction from one account and an addition to another, the sum of all accounts must necessarily be zero, thus a ledger has a sort of built-in integrity.
A ledger records payments between accounts by simply adding a line. The money, or the promise can by definition only be in one place at one time. There is no duplication possible. Whether the ledger is on paper, on a single spreadsheet, or in a single table database it is integral in a way that two ledgers might not be.
Between accounts in one ledger, payments take place instantaneously and definitively. A ledger is often likened to a railway network in which carriages flow easily between endpoints. But this is only as useful as the ledger is large. Each bank keeps its own ledger but payments between banks and between countries present a technical challenge of ensuring the integrity of the accounts. Payments must be certain to ‘leave’ one ledger and enter another despite typically running on different computers with different software and different owners. And there needs to be an audit trail. There must be no chance of payments derailing and not arriving, or of payments arriving without leaving anywhere!
Strong technology and legal oversight exists to ensure sure that both organisations’ auditors agree on the accounts and that promises were not lost or duplicated as they streamed from ledger to ledger and from database to database and from network to network, and that everything is reported to the authorities. The obvious solution is ledger of ledgers, which only banks can connect to and in many cases is owed by a cooperative of those banks, such as the Society for Worldwide Interbank Financial Telecommunication, SWIFT.
Needless to say, banking rails which are plugged into the global financial network are tightly controlled and expensive.
That is why banks regard their rails as private property and charge rent for the use of them.