The Twilight Isles are rich in metals. Indeed, some of the volcanos which form their basis will occasionally emit “lava” which is primarily nickel-iron rather than molten rock. Gold, silver, and platinum are found in relative abundance (at least compared to earth), as are a wide variety of gems, including diamonds, rubies, emeralds, sapphires, topazes, and spinels. Metamorphic materials, such as jade and marble, are not uncommon. Sedimentary rocks – such as slate or sandstone – are rare, and unusual, and are often used for decorative purposes.
This makes the coinage a bit awkward however.
The usual monetary metals are still attractive, durable, and scarce enough to do quite well for small transactions – but are awkward to use for larger ones. As a side effect, this means that many of the upper-end prices found in standard d20 sourcebooks are tolerably accurate in the Twilight Isles; a suit of full plate armor may indeed cost you thirty or forty pounds of gold.
Gemstones remain of value – but a handful of fine gems or a fine, palm-sized, stone represents a considerable windfall, not a vast fortune. The fact that the ocean is never far away reduces the price of pearls and gem-grade corals similarly. Sadly, gemstones do not come in easily-managed denominations, and their value is always debatable – making them unsuitable for use as currency.
A centrally-managed currency is a bit awkward in a realm where “countries” are scattered over many widely-separated isles. The Thunder Dwarves – who can handle the massive magical engineering needed to keep their widely-scattered cities in close contact – do make some attempt at it, but most of the other races don’t even bother trying.
The Shadow Elves, with their inherent ability to detect magic to deter counterfeiting, typically rely on coins made of magical materials – primarily the Thunder Metals*. Unfortunately, as might suit their general inability to get along, the various metals are valued differently at different places and times, according to demand and availability – varying as the various metals are found, produced, used, transported, and lost.
The Ikam have no use for “money” internally, although Dzer occasionally settle debts using some of the more valuable products and compounds they produce. Traveling Ikam use whatever system of exchange suits their current location.
The Thunder Dwarves, who have a centralized government powerful enough to regularize their exchange system do use some magical-metal coinage (albeit on a more regular basis than the Shadow Elves), but primarily use a system of jade-and-amber trading tokens (both relatively rare materials in the Isles) to supplement it. The Thunder Dwarves usually have a pretty favorable currency exchange rate with the other races, but also use far more of the Thunder Metals than they produce – creating a perpetual trade imbalance and pushing up the value of the Shadow Elf currency.
The Veltine don’t have a formal currency system, given that most of their notions of true wealth – as opposed to minor luxuries – are based on land and food. They do, however, find it easy to scent the purity and quality of various spices, drugs, and compounds – making such things a reasonably effective, if secondary, form of currency for them.
*The Thunder Metals are simply metals which have been infused with the energies of one of the Eight Thunders of the Twilight Seas. They’re most commonly extracted from (rare) natural deposits or produced by exposing great masses of metal to the Storms and carefully refining the resulting traces of transformed metal. Such materials can also be created through powerful magic or difficult alchemical processes, but this is generally far more trouble that it’s worth; there are better things to do with that much effort.