A Short History of Commerce (DMG)

Monetary systems aren't always based on coins. Many different forms of exchange can be in use simultaneously. Take, for example, the real world around the year 1200. Currency included the regulated gold and silver coins of Byzantium and the Middle East, the licensed mints of England, the paper currency of China, the cowrie shells of Oceania, and the carved stones of Aztec lands. These were only a few forms money could take.
==Goods==
Vigorous trade was done in goods. Grain, cattle, sheep, wool, jewellery, foodstuffs, and cloth were all items of value. A canny Venetian merchant would sail from Venice to England with a load of silks, trading it there for good English wool (making sure he made a profit), and return to Venice to sell the wool for another load of goods for England.
==Letters of Credit==
Eventually letters of credit and contracts grew. Now the Venetian merchant could sail to England to collect wool gathered by contract from a monastery. In return for their wool shearing for five years, he would guarantee them set payments in ducats or florins, although he normally brought them goods they ordered from Venetian merchants—silks, spices, glassware, or wine. Thus he made a profit from the wool back in Venice and a profit from buying goods for the English monastery.
On his return to Venice, the enterprising merchant would sell his cargo to the wool merchant in return for a note, and then take this note to a glassmaker and sell it for a load of valuable Venetian glass.
In time, the notes led to the rise of banking houses, though much different from the banks we know today. Intended mainly to finance large deals and serve the wealthy merchants, there were few controls on these banks. They were definitely not for the common man. They were not places you stored your money for a rainy day, but houses that guaranteed the value of a merchant's note or contract, all for a fee.
==Barter==
Other economies, especially those of primitive lands, worked entirely on a barter system. What a man could produce became his money. The farmer paid the miller in bushels of grain. The miller paid his lord in ground flour. When the flour was baked into bread, the baker was paid in loaves of bread. These he could sell for the few coins, fresh eggs, or whatever luxuries might be available.
During the Dark Ages even a man's life could be measured in cows, horses, or sheep. Kill a serf and you had to pay—perhaps five sheep, some to his lord and some to his family. The cost for a freedman would be even higher. Rents, taxes, and fines could be assessed in gold or grain. Eventually objects were assigned specific values. In parts of medieval Russia, furs were used almost like coins. Squirrel, ermine, and martin pelts all had values and were treated just as we treat money today.
As barter systems became more sophisticated, they included more things. Obligations and duties became part of the formula. A knight received land from his lord, but part of his "rent" was the obligation to make himself and a set number of mounted soldiers available to serve in his lord's armies for 40 days each year. The serf was obligated to work his lord's land and live in the same village all his life. You might adopt an economy like this in your campaign world—one based on obligations.
For the most part, the economies of the medieval period were based on a combination of coins, goods, and services. The knight could escape military service by paying a special tax to his lord. The king could insist that foreign merchants acquire goods only through barter. The baker could be paid a small wage for his services. Generally, changes occurred slowly as medieval man moved from a barter system to a coin-based economy. Thus, many different methods existed side-by-side.