Why Doesn't Westeros Have a Central Bank?

[DominusNovus]

While doing some other research into ASoIaF, I came across this interesting read from Forbes:

http://www.forbes.com/sites/modeledbehavior/2015/04/18/game-of-thrones-economics-why-doesnt-westeros-have-a-central-bank/

 

The author misses a few details here and there (such as the Faith is already acting as a banker, and that trusting a band of criminals and outcasts as your central bank is not the best idea), and seems most interested in getting Westeros onto a paper currency.  Regardless, its an interesting read, and I couldn't find any reference to it here.

[Wavey Sauce]

I think all the kingdoms just have to pay set taxes to the crown and they keep it vaulted in Kings Landing

[Lord Wraith]

While doing some other research into ASoIaF, I came across this interesting read from Forbes:

http://www.forbes.com/sites/modeledbehavior/2015/04/18/game-of-thrones-economics-why-doesnt-westeros-have-a-central-bank/

 

The author misses a few details here and there (such as the Faith is already acting as a banker, and that trusting a band of criminals and outcasts as your central bank is not the best idea), and seems most interested in getting Westeros onto a paper currency.  Regardless, its an interesting read, and I couldn't find any reference to it here.

 

While doing some other research into ASoIaF, I came across this interesting read from Forbes:

http://www.forbes.com/sites/modeledbehavior/2015/04/18/game-of-thrones-economics-why-doesnt-westeros-have-a-central-bank/

 

The author misses a few details here and there (such as the Faith is already acting as a banker, and that trusting a band of criminals and outcasts as your central bank is not the best idea), and seems most interested in getting Westeros onto a paper currency.  Regardless, its an interesting read, and I couldn't find any reference to it here.

 

The Faith doesn't really act as a bank. Its one of many groups that the crown have taken loans from. 

[Maester of Valyria]

As a disclaimer, my knowledge of the show is based on reading the first two books and being up-to-date on the show.

 

Pfff, amatuers.

[aryagonnakill#2]

Its simple, counting coppers is peasants work. 

[King Viserys Targaryen IV]

A bank would take power from the Lords Paramounts.

[John Suburbs]

This would require the Night's Watch to place branches in every major city and stronghold in the realm. I can't imagine anyone would want to travel all the way to the Wall to cash a note or take out a loan.

 

And then, good luck with all that "take no wife, hold no lands, father no children" business.

[Codename: Nymeria]

Because Westeros is a kingdom, meaning any central bank would have to operate with the authority of the King. The King wouldn't have any desire to that, though, because in the absence of a central bank, the royal court basically acts as such. Remember, Braavos is a free city. In any other circumstance, there'd be too great a risk of a King running up a huge amount of debt to a bank, and then, say, cancelling the bank's charter via royal decree. Since the King's word is law, there'd be nothing to really stop this. It also doesn't benefit the nobles in a feudal system, since they're better off with peasants being directly in their debt, rather than being able to utilize a third-party to step in with regard to financial disagreements. 

 

Mostly, though, it's just the IT is too volatile to act as surety on a central bank. As for paper currency, they do not (I'm gonna say I'm 99% certain about this) have printing presses on Planetos, so there'd be no way to produce sufficient stock to address the needs of the entire population. It's the same reason the Romans used coins, just like the Westerosi do; there's at least a theoretical value in the metal that makes the coin. 

[CJ McLannister]

As for paper currency, they do not (I'm gonna say I'm 99% certain about this) have printing presses on Planetos, so there'd be no way to produce sufficient stock to address the needs of the entire population. It's the same reason the Romans used coins, just like the Westerosi do; there's at least a theoretical value in the metal that makes the coin. 

Paper currency does not strictly require a printing press as such.  If you can mint coins, you can impress images onto paper.  The trick is convincing people that the paper has any value.  It's a big leap to go from a physical metal with intrinsic value to a paper that has value because the king says it does.  Especailly if there's more than one king around.

 

It's actually interesting how little currency is mentioned considering its historic role in establishing the legitimacy of rulers.  As far as I know, Manderly's suggestion to mint new currency for the North is the only example we have, and I don't think there's any evidence that he ever followed through on it.  With Robert's hatred of Targaryens, I'm surprised he kept the gold dragon as the standard currency.

 

Also, with all the borrowing from Braavos, are they borrowing Westerosi currency that made its way across the sea at some point, or are they just receiving pure metals with which to mint coins? 

[DominusNovus]

Given the sophistication of the Iron Bank, there must be some form of paper instruments in existence. Promissary note, bank notes, checks, something. Any sort of written promise that that money you're owed can be gotten in Braavos.

[Maester of Valyria]

Given the sophistication of the Iron Bank, there must be some form of paper instruments in existence. Promissary note, bank notes, checks, something. Any sort of written promise that that money you're owed can be gotten in Braavos.

I agree-we've seen in several ways how Braavos is way ahead of the rest of the world in most technological aspects. If anyone east of the Bones is going to develop printing, it'll be the Braavosi.

 

We have seen forms of promissary notes, such as when Tyrion writes out his promises for the men of the Golden Company, and when the Brotherhood Without Banners takes the Hound's gold. This often seems to be an informal practice, but it shows the concept is not entirely alien.

[Balerion's Whiskers]

Paper currency does not strictly require a printing press as such.  If you can mint coins, you can impress images onto paper.  The trick is convincing people that the paper has any value.  It's a big leap to go from a physical metal with intrinsic value to a paper that has value because the king says it does.  Especailly if there's more than one king around.

 

It's actually interesting how little currency is mentioned considering its historic role in establishing the legitimacy of rulers.  As far as I know, Manderly's suggestion to mint new currency for the North is the only example we have, and I don't think there's any evidence that he ever followed through on it.  With Robert's hatred of Targaryens, I'm surprised he kept the gold dragon as the standard currency.

 

Also, with all the borrowing from Braavos, are they borrowing Westerosi currency that made its way across the sea at some point, or are they just receiving pure metals with which to mint coins? 

That's interesting. As far as I know there really isn't a standard weight per 'unit'. Remember the gold coins that Qyburn found in the gaoler's cell that they linked to Olenna?

 

 

Beyond a doubt. To be sure, the hole was empty when I found it. No doubt Rugen took his ill-gotten treasure with him when he fled. But as I crouched over the hole with my torch, I saw something glitter, so I scratched in the dirt until I dug it out." Qyburn opened his palm. "A gold coin."

Gold, yes, but the moment Cersei took it she could tell that it was wrong. Too small, she thought, too thin. The coin was old and worn. On one side was a king's face in profile, on the other side the imprint of a hand. "This is no dragon," she said.

"No," Qyburn agreed. "It dates from before the Conquest, Your Grace. The king is Garth the Twelfth, and the hand is the sigil of House Gardener."

 

What would the Iron Bank do if Cersei paid them off in these old Gardener coins? (provided she had enough)

 

Also given the massive percentage of the population that is illiterate,(including some nobles) printed money probably isn't going to catch on any time soon. It is a concept that is beyond their capabilities. The printed word is considered mysterious by some and ignored by others.

 

Printed money is possible. Benjamin Franklin used the veining in a contact-printed leaf on his currency to make sure it couldn't be copied, even though printing presses were common in his time...(probably because printing presses were quite common in his time.) The notes could be hand-drawn and leaf printed on Planetos, but I seriously doubt that they would be respected as currency.

[Jacques the Japer]

I think GRRM meant for Westeros to be economically similar to the pre black death western Europe, where banking was a sinister, nefarious practise largely performed by Italians and Jews (As both weren't to concerned with the papacies' waffling against usury).

 

What I wonder about is that there's apparently coinage in circulation with Westerosi origins stretching back many hundreds of years, yet too my knowledge thered never  amention of a royal mint.

[Jaak]

 too my knowledge thered never  amention of a royal mint.

To my knowledge, there is. The heads of "all three Mints" are listed among Littlefinger appointees.

The number is interesting. Three.

[The Fresh PtwP]

Doesn't Cersei want to build a bank in Lannisport after her terrible meeting with the braavosi banker? Definitely one of her better ideas.

[Balerion's Whiskers]

Doesn't Cersei want to build a bank in Lannisport after her terrible meeting with the braavosi banker? Definitely one of her better ideas.

Yes, she did.

 

 

A group of merchants appeared before her to beg the throne to intercede for them with the Iron Bank of Braavos. The Braavosi were demanding repayment of their outstanding debts, it seemed, and refusing all new loans. We need our own bank, Cersei decided, the Golden Bank of Lannisport. Perhaps when Tommen's throne was secure, she could make that happen. For the nonce, all she could do was tell the merchants to pay the Braavosi usurers their due.

[LogicalLeopard]

I don't think it was one of her best ideas. When you think about it, you don't need a place to store your money in Westeros. But you do need a place to get loans. And where do you get loans? From other nobles. Like the Lannisters. Having no banks means that you can have nobles who become more powerful by having others indebted to them. By making banks, you remove that option from the game. And who enforces the debts when they need to be collected? Will Kings soldiers be set aside to do so?

[The Lord of the Crossing]

Who would run the bank and where would it be located?  Everyone is a potential enemy.  Do you want your money held by someone who could become your enemy overnight?  There's no neutral third-party.

[CJ McLannister]

To my knowledge, there is. The heads of "all three Mints" are listed among Littlefinger appointees.

The number is interesting. Three.

Too few probably.  Considering the vast reaches of the realm, I would think they would need a few more at least.  It's also possible that there are just three "royal" mints, but other independent ones.  It's hard for us to conceptualize a currency that doesn't need to be backed by a government, but in a precious metal economy, any coin that is minted has value- regardless of who minted it.  Counterfeiting was a problem, but only in the sense of trying to pass inferior metals off as gold or silver.  That's why people were more interested in biting the coins than closely examining them to make sure they were legal tender authorized by the king.  Shaving the metal off would also have been a problem (see Bronn's line about a "clipped copper"), but again, it's because there's less weight (thus less value) in a clipped coin.

 

Doesn't Cersei want to build a bank in Lannisport after her terrible meeting with the braavosi banker? Definitely one of her better ideas.

That's not a terribly high bar.

[CJ McLannister]

There's no neutral third-party.

The Forbes article posits the Night's Watch as just that, but some have already pointed out the potential problems with trusting rapists and dishonored knights to manage the realm's finances.