Hello, I wrote a post about Anglo-Saxon coinage and its importance to the Early Medieval English economy here. The decline of a monetary economy in Western Europe is only a phenomenon of the Early Medieval period in so far as this period overlaps with what we might term 'late Antiquity'. The decline starts with the Crisis of the Third Century in the Roman Empire, as successive Emperors repeatedly devalued the currency in attempts to meet the needs of ballooning military costs. The wars and civil upheaval which lay behind these vastly inflating military costs also caused extensive disruption to the Empire's internal trade networks which formed the basis of Rome's economic model. By the time of the Empire's long, agonizing death throws in the 5th century, these logistical and economic networks had almost entirely collapsed, and the Empire's silver currency had effectively vanished, with the remainder being severely devalued.

If anything, the Early Medieval period could be categorised by the gradual re-emergence of a coinage-based economy and the re-establishment of wider trade-networks despite the decentralisation of political power and economic systems. The earliest forms of this coinage are sceattas, fragments of silver similar to later Scandinavian 'hack-silver' which emerge to underpin the maritime and riverine network of wic sites which develop around the North Sea, English Channel and Rhineland in the 6th and 7th centuries. As you suggest, in-kind payments are not ideal for trade beyond the c.40 mile radius of an early medieval market town; and sceattas rapidly appear to fill that niche, becoming increasingly important and sophisticated.

By the late 7th century, sceattas evolved into the English silver penny currency which remained [broadly] unchanged beyond an increasing sophistication in design and use - and maintained a surprisingly high consistency of quality - until well after the Conquest of 1066. The distribution of pennies in both hoards and single finds across the British Isles suggests that by the 9th and 10th centuries, the English economy was fairly substantially monetized, not just on an international, but also on a local level. At a local level, a significant proportion of commerce would of course still be on a 'in-kind' system, but then again labour within a community would often be organised collectively despite the nominally independent nature of tenancies.Rents and taxes would be paid to local lords mostly in the form of labour performed on the lord's lands, but also in the form of other services rendered.

Laws such as Æthelstan's 926 Grately II code set a number of price values for livestock, and also mandate that any transactions over the value of 20d be carried out in a burh, a limit that was later relaxed somewhat. English silver pennies were popular in trade with Scandinavia and Hiberno-Norse settlements in Ireland, expedited in part by access to substantial Welsh silver supplies secured through Mercian influence. Of course, the basis of trade remained in commodities. The 'merchant' of Ælfric's Colloquy' states:

I embark on board ship with my wares and I sail over remote seas, sell my wares and buy precious objects that are unknown in this country. I bring these things to you over the sea enduring great danger and shipwreck with the whole of my goods hurled overboard and with me hardly escaping with my life... I bring purple cloth and silk, precious stones and gold, various sorts of clothes and dyes, wine and oil, ebony and brass, tin and brimstone, glass and like products.

The chief English export was wool, sold to markets primarily in the Low Countries. The blossoming trade across the Irish sea saw the exporting of English grain, textiles and metalwork, and the importation of Irish cattle and slaves. The English also exported Welsh slaves, primarily through the port of Bristol. The discovery of substantial silver deposits in Carlisle in the late eleventh century also led to its rapid development as the hub of a trade network stretching from Ireland to Flanders, with a significant Flemish quarter. The prosperity of the silver trade meant that for a period of the twelfth century, Carlisle paid for significant infrastructure across Scotland, and led to Jordan de Fantosme declaring it one of the finest cities and castles in the country.