I don't think that a central authority is necessary for money to work, at least not in form of a monopolist. Actually the current systems are rather unsatisfying because a state can loose its credibility and thus the trust in its curreny quite fast, basically as soon as war looms on the horizon or it becomes apparent that it will default on its debt. In the last 25 years over 87 currencies crashed. And because of the monopoly of the state on money the whole economy is usually going down along. For my part I would therefore abandon the monetary monopoly of the state and allow competition, allow companies to issue money. When they connect their name to the currency and have no legal power to make their money legal tender they will have a much stronger incentive to provide a good and stable money. Hayek wrote a fascinating treatise on the denationalisation of money, and with the ongoing globalisation sooner or later we will get used to juggle with more than one currency in our pockets. Second Life seems to be a step in the direction that companies start to issue private currencies and when states, especially in the developing countries, will fail to keep their currency stable chances are that they will be replaced by private currencies.

Equally interesting and probably easier to believe are gold backed currencies with competing private institutes issuing goldbacked money.

Still, its great to see people thinking about money in another way than just how to get it.