Kirib: Difference between revisions
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The '''Kirib''' (symbol: ♅; ISO code: KRB) is a multinational currency used by countries of the continent of [[Aurora]]. The words kirib and albon originally referred to units of measurement for gold and silver in the Kingdom of Morstaybishlia. Merchant banks issued kirib certificates and coins based on gold and silver reserves. In 1422, the Kingdom of Morstaybishlia established the kirib as a currency which consisted of 128 albons. The Bank of Staynes was established shortly after to control the currency. With [[Great Morstaybishlia]] entering into agreements with other nations to enable them to use the kirib as their currency, the Kirib Monetary Union was formed. In 1893, the Bank of Staynes decimalised the currency, making 1 kirib equal 100 albons. In the 1910s, it effectively became a representative currency and eventually abandoned the gold standard in 1975. It is the most widely traded currency in the world and the largest reserve currency in the world, with the [[Standard Hawkings Dollar]] of [[South Hills]] coming at a near second
==History==
=== Background ===
The history of the kirib is incredibly long and complex and, to an extent, represents the evolution of currency on Urth generally. To narrow the scope of this article, the article will examine the period starting from the 9th century CE. During this period, people would buy goods and services using gold and silver coins. These coins were produced by mints that were approved by the Treasury of the Morstaybishlia and they were issued in denominations that varied by weight called kiribs for gold and albons for silver. The Treasury of Morstaybishlia eventually wanted to control the supply of gold and silver coins thus it banned other mints from issuing kirib and albon coins and took over the issuance of these coins. Kiribs and albons were not necessarily currency in and of themselves. They represented the weight and type of precious metal. In reality, gold and silver coins were the real currency and were acceptable in most countries around the world, regardless of the name that was stamped on the face. Institutions called banks were established which stored gold and silver for people. They would give each depositor a certificate and/or tokens that represented the amount of gold and silver that the depositor could withdraw and they gave the weights in kiribs and albons. This allowed mints to spring up as they would issue coins called tokens that were made with low
=== Merchant period ===
As Morstaybishlia traded with nations far and wide, traders would buy vessels and undertake long trips to bring goods to and from Morstaybishlia. Merchants formed guilds which were institutions that were designed to protect their interests and offer mutual support. They used kirib and albon coins to trade not only within Morstaybishlia but with foreign lands. They used these coins to buy things from other traders and they, in turn, accepted them as payment for goods and services that they rendered. They found that the banks which existed were extremely tedious and inconvenient especially for long-distance trade and travel. Thus, these merchant guilds established their own banks and stored their gold and silver coins in their own vaults. These banks were called merchant banks. They issued their own certificates denominated in kiribs and albons as previous banks had done. The difference was that these merchant banks issued certificates and tokens that were recognised by increasingly wider networks of traders. Because the merchant banks had offices in multiple cities and were reliable, people, including those outside the merchant guilds accepted the certificates and coins as legitimate payment for goods and services as they trusted that they could eventually withdraw kirib and albon coins at face value.
Merchant banks realised that people would hold on to these certificates for a very long time, so they started issuing more certificates and tokens than there was gold and silver in their vaults. Moreover, they would lend out the gold and silver to other traders and then everyday people would repay them in interest, so they were comfortable in the knowledge that they would make enough money to repay their depositors and even make profits for themselves which they could lend out to others. Unfortunately, people started exploiting this system and creating their own notes and coins. The merchant banks could not keep up with the situation and they asked the Crown to step in. The Crown made it a criminal offence to counterfeit bank certificates and all certificates, tokens and gold were recorded in the ledgers of the Treasury to keep track of legal currency. This worked well, however, the merchant banks issued too many certificates and tokens. Thus, when there were tough times such as a war or drought people would want to withdraw their gold and silver coins in return for the certificates. Unfortunately, this led to some banks going bankrupt or making losses as they struggled to pay back their obligations to their depositors. This would lead to inflation, where the value of gold and silver was insufficient to pay to for the available supply of goods and services. The Crown realised that this would lead to social and political instability and would bring economic hardship upon the nation. To disassociate themselves from merchant guilds, most banks dropped the term merchant from their name unless they exclusively conducted services for merchant guilds.
=== Treasury period ===
The Treasury of Morstaybishlia decided to regulate the banks. It ordered all existing banks to keep a set amount of gold and silver in their vaults compared to the total number of certificates and tokens that they had issued, formally establishing the notion of fractional reserve banking. Moreover, banks could only be established with the approval of the Treasury according to the criteria that it set out. In 1422, under the reign of King Gustav I the Great, the Crown decided to formally establish the kirib as the currency of Kingdom of Morstaybishlia and all of its territories and it divided 1 kirib into 128 albons. This made the value of kiribs and albons independent of gold. This meant that kiribs and albons no longer measured the weight of pure gold and silver, but different amounts of kiribs and albons could be exchanged for a set weight of gold and silver as determined by the Treasury of Morstaybishlia. This also began the gold standard (formally called the precious metal reserve standard). The certificates and tokens of the new Kirib currency were now banknotes and coins, currency in their own right. As the duty of administering this system and handling the financial requirements of the government of Morstaybishlia became more complex and as the Treasury became so powerful that the Lord High Steward who governed it
=== Bank of Staynes period ===
The Bank of Staynes demanded that all that banks use kirib notes and coins under a new regime that it controlled, practically forbidding any mints or printers other than the Staynish Banknote Company and the Royal Staynish Mint from producing currency. The banks would request permission from the Bank of Staynes to issue a set number of banknotes and coins based on the total gold and silver in their vaults. The Bank of Staynes would write them a cheque that they could redeem at the Staynish Banknote Company and Royal Staynish Mint for a fixed number of coins and notes. Each bank would request its own unique designs. These notes and coins could be redeemed at any bank for gold and silver based on the exchange rate declared by the Bank of Staynes. By this time, the use of gold and silver in
=== Kirib Monetary Union ===
Some countries that traded with the powerful Kingdom of Great Morstaybishlia were struggling to pay for imports. They had to take out massive loans from Morstaybishlian merchant guilds and other bodies to afford the cost of imports. They often lacked the gold and silver to pay them back. Moreover, they realised that life would be easier if they could pay them back in more abundant and easily accessible kirib coins and notes instead of physical gold and silver. Thus, they decided to approach the Crown directly and develop a system that would allow them access credit for imports. The Crown signed bilateral treaties with these nations whereby they could use the kirib as their currency if they adhered to strict requirements. In general, their banks were required to adhere to the fractional reserve standards that Morstaybishlian banks were required to follow. Moreover, they were required to strictly limit public spending and lending. To ensnare them and entrench their economies in the Morstaybishlian sphere, the Bank of Staynes created exceptions for payments made in kiribs, incentivising them to adopt the kirib. In return, they could keep their gold and silver in their own country. Thus, the nations that participated in
=== Decline of cash ===
During this time, the telegram was invented. It allowed communication over incredibly long distances and reduced the need for people to physically be in a place in order to do business. The Bank of Staynes decided that all future loans to large banks and governments would longer be in notes and coins, but they would keep the loans as balances on their respective balance sheets. This eliminated the need for physical notes and coins. Commercial banks extended similar services to their commercial clients, allowing the wealthy to keep their wealth as entries in the ledgers of banks rather than carry around notes and coins. They could simply write a document called a cheque that would allow the bearer to go to the bank where issuer of the cheque had kept their funds and request a fixed amount of currency either in the form of gold and silver or in the form of kirib notes and coins. This service became so sophisticated that bank could simply adjust their ledger entries to represent that value had shifted between their clients. Thus, large scale payments could be settled in this manner instead of piles of coins or buckets of physical money. Moreover, the Bank of Staynes favoured this method as it prevented the need to issue large
=== End of the gold standard ===
The [[Great War]] was incredibly expensive and it required the Treasury of Morstaybishlia to borrow incredible amounts of gold and silver from the Bank of Staynes to pay for the war effort. People became increasingly worried that the kirib would become virtually worthless and started queueing at banks demanding that their kirib notes and coins be redeemed for gold and silver. The Crown immediately banned the use of gold and silver in everyday transactions. This had the effect of making the kirib a representative currency. Thus, people were forced to hold on to their kirib denominated assets, preventing a massive run on the banks that would have crippled the economy. People were free to pay their taxes in kiribs instead of precious metals and banks expected kiribs instead of precious metals and payments for loans. Furthermore, the government could channel these resources to fighting the war and supporting its allies in the Imperial Powers. This did not mark the end of the gold standard
Electronic systems emerged that made it easier for people to communicate and usurped the telegram. They had the effect of making banking vastly easier and reducing the dependence on physical currency for large transactions. The [[Auroran Imperial War]] was incredibly costly for the Bank of Staynes. Now, it was not individuals and business that would demand gold and silver, but entire governments. The Bank of Staynes dreaded the probability that the Kirib Monetary Union would effectively collapse. Moreover, the member states of the Kirib Monetary Union were on opposing sides of the war. Thus, the Bank of Staynes declared monetary neutrality, protecting the hard currency balances of participating states even if they were not allies of Great Morstaybishlia. This drew a lot of public criticism against the bank both from within Great Morstaybishlia who felt that the Bank of Staynes betrayed them and by foreigners who felt that the Bank of Staynes could be manipulated by the Morstaybishlian government to their detriment. When the war ended, all of Morstaybishlia's enemies were defeated. But it wanted to prevent the collapse that would lead to instability in the KMU. Thus, it was decided that the value of kiribs would no longer be fixed to gold at all - effectively ending the gold standard. Instead, the demand and supply forces on commercial markets would dictate how much it was worth. Moreover, gold and silver as means for transactions
=== Pan-Auroran era ===
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== Exchange rate==
The kirib was linked to precious metal reserves of the Bank of Staynes for most of its history. With the start of the industrialisation of mainland Aurora, this became untenable and thus the kirib became a solely representative currency for precious metal deposits held by the Bank of Staynes. The metal reserve standard was abandoned in the 20th century and the currency became a fiat currency. It adopted a managed float regime during its transition. Following the fading out of the managed float regime, it has been controlled entirely by market forces through the adoption of a free
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