Packilvanian Central Bank

The Packilvanian Central Bank (Packilvanian: luMonaat luShahishme aBakhilfaniya) is one of the most powerful central banks on Urth alongside the Auroran Central Bank of the United Nations of the Auroran Continent, and the Concordian Reserve Bank of the United Confederation of Concordian States. It supervises banking in Packilvania, issues the Packilvanian dinar and controls monetary policy.

It was first founded in 1921 after the Packilvanian Communist Party under Gideon Muktan overthrew the Demirite dynasty under Sultana Zerah Demir IV during the First Packilvanian Civil War. The Provincial Banks were nationalised and amalgamated to form the Packilvanian Central Bank. Even after the Carriers of Mercy under Sultan Amhoud I deposed the Communist Party and established the rule of the Bedonite dynasty over Packilvania, the Bank remained largely unchanged. It is seated in Bingol and its incumbent governor is Dr Uramid Nekhal.

History

Demirite dynasty

Under the Demirite dynasty, starting in 1838 on the decree of Sultan Jahel, the Provincial Banks were established. Each province in Packilvania had one Provincial Bank. Their function was to issue Packilvanian dinar notes and coins, and to act as the banker of the state. They did not provide commercial banking services for the public but acted as a lender of last resort to other banks within their province. Packilvanian dinar currency was exchangeable at par at any other Provincial Bank. These Provincial Banks were owned by the commercial and investment banks that were located in the province of that bank. This system helped to eliminate the inefficiencies of local banks issuing their own currency.

Members of the nobility of Packilvania, wealthy oil and rail tycoons, and the Imperial family owned shares in many of the local banks as economic power and wealth concentrated in the hands of a small part of the population. 7 banks arose which, through mergers and acquisitions as well as natural growth, controlled a substantial portion of the market share and subsequently inherited substantial shares and the concomitant voting rights that allowed the decisions of the Provincial Banks to be controlled by fewer people.

This caused the Provincial Banks to adopt practices favourable to the largest banks. This led to wild variations in asset and consumer prices across provinces that threatened the stability of the Packilvanian banking system and the welfare of the country. Thus, the Imperial Banking Commission was created in 1879 under Sultan Ishak V to regulate the Provincial Banks and the banks under them. With the outbreak of the Great War in 1914, the government under Sultana Zerah Demir IV often suspended the convertibility of dinars into gold and instructed the Imperial Banking Commission to order banks to suspend the issuance of gold to the public. Coupled with the strain on the economy that was created by the war, this prompted bank runs and higher inflation.

Packilvanian Communist Party

Gideon Muktan, the leader of the Feline-only caucus in the Parliament of Packilvania, made impassioned speeches calling for the government to stop the war and improve the management of the national currency to stabilise inflation and provide Packilvanians with financial stability. His requests were often ignored. The Feline Club was renamed as the Packilvanian Communist Party and after securing the loyalty of Feline soldiers who were tired of the war and the incompetent management of the financial system by the state, led a civil war against the government. After the passing of the Charter of the People's Republic of Packilvania (luKharta aluJumhuriyat ameShabil aBakhilfaniya), the National People's Congress of Packilvania began reforming the banking sector which culminated in the nationalisation of the Provincial Banks and their amalgamation into the Packilvanian Central Bank through the Banking Reform Law of 1926 (luKhanon aluTawahal aleMonaat).

The powers of regulation that were in the hands of the Imperial Banking Commission were transferred to the PCB and the IBC was abolished. Many IBC members joined the PCP and retained their jobs as banking regulators. The PCB managed to stabilise the banking system and restore the reliable convertibility of currency to gold.