MUST-401 Lessons

Hello my students! We have quite a lot to cover today so I’ll keep things as short and sweet as possible. In this lesson we’re going to be discussing the next logical step after talking about careers: money!

Currency is defined as a system of money that a country or society uses. The magical world within the UK uses a three-coin system when it comes to purchasing goods and services, but other countries in the wizarding world use other currencies. For example, France uses the Bezant, and in the USA, magic users use Dragots and Sprinks.

Let’s review the particulars of the UK wizarding currency before we move on to Muggles’.

Wizarding Currency in the UK

As aforementioned, UK witches and wizards rely on three coins in order to purchase anything. The three coins are as follows: Galleons, Sickles, and Knuts. It’s fairly easy to tell the difference between these coins, they are all different colours! Galleons are gold, Sickles are silver, and Knuts are bronze. For those of us that grew up in the Muggle world, like me, the conversion rate between these coins may seem a bit random. If you grew up with magic though, you may find the bewilderment of your Muggle-born peers to be confusing. No matter which camp you fall into, here’s a handy chart so you can remember the conversion rates between the wizarding coins. 

As you can see, there is the possibility for a wizarding family to have a lot of coins in their possession! This is why banks were created, as a secure holding area for a person’s most treasured assets. In short, a bank is a place where currency and other important valuables are stored. In a bank, a patron will have a box that is kept under lock and key (and plenty of safety spells) where they can stash their money when it is not in use. The bank’s patrons can use this service for a small fee every year to keep the box available to be used.

These lockboxes are then stored in the bowels of the bank. For the UK’s premier bank institution, Gringotts, this means stashing vaults deep underground and having plenty of security to protect the patrons’ valuables. Gringotts is run entirely by goblins due to their intrinsic skill at money and finances, and they are the only ones that can find a patron’s vault amidst the maze underground. It is said that dragons and other formidable beasts live in the bowels of the bank as well, just as an added security measure. 

Within the wizarding world, one simply uses coins that they store themselves or within Gringotts to pay for things. However, Muggle banks work differently from this and they even have an alternative way to pay for goods and services.

Muggle Currency in the UK

Let’s first look at the physical currency that Muggles use. We will specifically focus on the currency of the UK (and a handful of other places), however, like wizarding currency, you should note that there are many separate Muggle currencies across the globe. 

In the UK, citizens use a combination of coins as well as paper banknotes. The name of their monetary value is pound sterling, often abbreviated to pound, and is nicknamed to quid. Pounds are often referred to with the symbol £. Banknotes are used when buying something over £5. Banknotes generally come in denominations of £5, £10, £20, and £50, but one can sometimes see rarer denominations in circulation. 

Similar to how Knuts are a subsection of Galleons, there is a division made for a monetary amount that is even smaller than £1. These are called pence (singularly, a penny) and are often abbreviated to simply p. There are one hundred pence in a pound. So, if one was buying a small item, say a stick of chewing gum, they may see that the price is 50p -- meaning 50 pence, and not yet a full pound. 

Coins are often used when buying something of such small value -- coins come in denominations of 1p, 2p, 5p, 10p, 20p, 50p, £1, and £2. So, if you are purchasing something that costs £7, it would be entirely reasonable to hand over a £5 banknote as well as a £2 coin. Using a mixture of both banknotes and coins is extremely common in the UK. That said, you can always rely on change being given back if you do not have the exact amount of money with you! In the example above, you could purchase the item with a £10 banknote and would likely receive two coins back. You guessed it: a £1 and £2 pair of coins!

The exact conversion rate between Galleons and pounds fluctuates on a daily basis, depending on how markets are. However, a good rule of thumb is to think of one Galleon to be equal to £5. I have found a useful online converter for you to use if ever you want to convert between British Muggle currency and wizarding currency (https://www.hp-lexicon.org/currency/exchange/).

Muggle Banks

Even within the Muggle world, people do not want to always carry around loads of coins in case they want to buy something. Therefore, banks exist for non-magic users as well. While Muggle banks host a variety of services, I’ll explain two major functions. A common service that Muggle banks provide is that you can rent a safety deposit box. This box is very similar to the Gringotts system. You can rent a small box to put any money or valuables in and the bank will keep it safe for you using their own security technology. For reasons I’ll explain in a moment, safety deposit boxes are slowly being phased out as not as many patrons want to use them.

The second service a bank provides is a little more complicated. Gringotts bank does not have an equivalent of this service - at least not yet. Because of the magical power of Gringotts, wizards and witches can store a practically endless amount of vaults and money using well-crafted expansion charms. However, Muggles do not have this luxury. Therefore, any bank cannot physically store that much -- there simply isn’t enough room! So what happens is that the bank doesn’t actually have your money.

This may sound preposterous to some of you -- how can a bank store your money but also not have your money? Let me explain. When a patron opens an account with a bank, the bank teller -- an employee that can answer patrons’ questions and is essentially in charge of handling bank transactions -- will take the money that the new client wants to put into their account. This is called a deposit. At any point in the future, the patron may come back to the bank and retrieve their money. This is called a withdrawal.

Between the points of deposit and withdrawal, the bank actually has free rein to do what they’d like with your money. This includes: paying their own salary or giving the money to other patrons for withdrawals. It can also mean investing the money, or giving larger amounts of it as a loan to applicants (in which the bank will charge applicants on the loans – called interest).

That said, banks generally have a few tens of thousands of pounds on hand, so should you need money you would be able to withdraw it, despite everything the bank is doing behind the scenes. That said, most banks have a set limit on how much money a patron can withdraw at one time unless there was plenty of warning ahead of time.

This entire system is built on the idea of credit. Credit is akin to IOU’s. When the bank borrows your money to give someone else a loan, they put an IOU on your account otherwise known as a credit of that amount. In return for a bank doing this, the patrons’ money gets to be kept safe. As an added bonus, banks generally will pay the customer money as a reward for participating in this system. This payment is called interest, and the amount of interest an account receives is dependent on how much money was in there in the first place. 

Debit and Credit Cards

I have one last concept for you to discuss with you that is crucial to understand if you want to know the state of Muggle currency today. This topic is related to the idea of credit. 

Let’s say a Muggle worker -- we’ll go with an archaeologist, from last week’s lesson -- earns £20,000 a year for their work. Earning a physical £20,000 is a lot, even when the majority of that physical money is within a banking system. How is a Muggle expected to carry that with them always without magically enhanced pockets or handbags? They don’t. Instead, they will carry with them a card that has loads of information attached to it. In fact, it’s the creation of these cards that is slowly diminishing the need for safety deposit boxes and physical money altogether.

The simplest kind of these cards is a debit card. A “debit” is a word meaning “money owed.” If you were writing a note to remember that your friend paid for lunch last week and you should pay them back, you could write down that you have a debit of whatever it is you owe. When a Muggle uses a debit card, it allows the seller to know that the purchaser owes money to them. Through the magic of technology and the Internet, the seller can use a computer to take the amount owed straight out of the purchaser’s bank account and into their own! I imagine this sounds a bit worrisome but the chances of there being a mix-up and an incorrect amount being taken is relatively low. And if this does happen, the bank is obligated to help sort out the transaction error.

The second sort of card is a credit card. You may be able to guess what this does, based on what you now know about credit! The difference between a debit and credit card is that with a debit card, the seller can only take an amount of money that the purchaser actually has in their account at a time. If the purchaser only has £50 in their account, then when the seller tries to take out £100, the computer will reject the transaction because of insufficient funds. With a credit card though, you are allowed to spend money that you don’t technically have. The catch is that you now have an IOU. In the example above, the purchaser could use a credit card instead to purchase the £100 item even though they only have £50. However, they will now owe that money to the bank. Generally, the bank will give you a few weeks to settle up and then they start charging interest on the mini-loan they gave you to buy that £100 item.

I hope you enjoyed this week’s lesson! It was a bit technical, I’m aware, but I have no doubt that you are well-versed enough in Muggle culture to get the hang of it. I am always available to explain things further if you find you’d like some more insight though. I have a quiz and a fun roleplaying assignment for you for homework today. Until next time!

Anna Soleil

Sources:

https://i.pinimg.com/originals/f5/c7/cb/f5c7cbbf0a4bc4cfda445bf3687ed86a.jpg

https://harrypotter.fandom.com/wiki/Wizarding_currency

https://mtv.mtvnimages.com/uri/mgid:ao:image:mtv.com:98199?quality=0.8&format=jpg&width=1440&height=810&.jpg

https://www.hp-lexicon.org/currency/exchange/     

https://cdn.aarp.net/content/dam/aarp/money/budgeting_savings/2020/01/1140-open-safe-deposit-box-contents.imgcache.rev506fc3302e5bfaaecac15f576d7cd640.jpg 

https://specials-images.forbesimg.com/imageserve/1148143441/960x0.jpg?fit=scale

https://www.lessonpaths.com/british-currency/ 

https://i.pinimg.com/originals/ec/ed/8b/eced8b305a0a2a1af8992a7d46f33ea4.jpg