Letter to Shareholders of the Bank of Valoria, from Chairman Silas

Although my participation in the constitutional convention has temporarily taken much of my attention, rest assured that the other board members will be able to manage the bank in my absence. I can say that I have already brought about a great benefit to our nation by attending this convention. The creation of a Central Bank will add economic stability that Valoria needs right now. This will benefit our bank as well as the entire country.

On the very first day, during a lunch break, I was able to gather like minded individuals: The bureaucrat Pepe, the trader Mira and Admiral Dauphin. These people understood our country faced serious economic issues. I asked them if we could introduce this matter in our afternoon session and they backed me up. The great mother of our revolution, Crysta, set the agenda. She wanted to put off more contentious issues until later in the week anyway, so she was happy to move this issue to the top of the agenda.

It took a little bit of work getting some of the lower class members to approve of the idea, but with some compromising, we came up with a system that allows for a degree of democratic oversight, but still remains relatively independent of political pressure. It will allow for sound monetary policy, and bring economic stability to our nation.

From the notes of Citizen Emilia, Voice of the People

Charles wanted to join me for lunch, although he really wanted to see Martin. I don’t really like Charles much, his aristocratic privilege doesn’t sit right with me, but he had shown great concern for Martin’s plight during the first week of debates, so I decided to let him join us. He tried to convince Martin that he was special, but Martin said, “not anymore, now I’m just a normal citizen.”

After lunch, we returned to the convention hall, and a group was trying to convince Crysta to change the agenda. Silas had some idea about a Central Bank, and he had the backing of Pepe, Dauphin and Mira. Crysta intended to save more controversial issues for later in the week, so she was happy to introduce this idea now. I was a little skeptical but I decided to hear them out.

The proposal was for a central bank to control the minting of coins, the printing of banknotes, regulate financial institutions, and act as a lender of last resort. They argued that such an institution could bring stability to the economy, but it needed to be relatively free of political pressure. Their proposed board that governed the bank had a mix of members appointed by regional governments, the national government, and private banks. There was some democratic influence on the selection of most of the board, but no real recourse to remove them once appointed to a their ten year term.

Robert was happy that the proposal included regional representation, but like me and Tessa, he was concerned about the body being unaccountable. Silas argued that it had to be free from political influence or it could lead to bad decisions for short term political gain. Charles came up with a compromise, he borrowed the removal method from the judiciary, a 60% supermajority in the Lower House, and suggested it could apply to the Central Bank’s board as well. We all agreed that this balanced independence with accountability. This reminded me that Charles isn’t just some out of touch noble, but he does have practical mediation skills.

I looked at Aguilo to see if he might dare to push military influence here, or maybe Oliphuant would push for another noble carve out. They didn’t say anything. I think they were still reeling from the debate week, and were saving their energy for big fights that would come later. I was a little nervous about what would come later in the week, but I was relatively happy with what we had achieved today.

Dispatch from Admiral Dauphin, Revolutionary Naval Command

Over lunch, that banker Silas recruited me and a few others to back his Central Bank plan. He must have done his research, knowing I would care about his economic vision but the generals wouldn’t be interested. He was right, and his proposal made a lot of sense, but I cautioned him that the radical democratic bloc would be extremely skeptical if there was not some democratic oversight. I advised him to have board members appointed by both national and regional governments, and to reduce the percentage of the board appointed by private banks. He took my suggestions seriously.

When we returned from lunch, Silas and Pepe asked Crysta to move this bank idea to the top of the agenda, and I lent some support as well, but I was only half paying attention to them, I was looking for Aguilo and Oliphaunt. I told them, this isn’t the issue to fight over, save it for another day. This Central Bank could be a powerful institution to stabilize the economy, we don’t need military officers stepping in to run it. We’ve already seen in the past few weeks, how much military officers struggle with administrative work. We don’t need to entrench that into the bank. I think they took me seriously.

As expected, Emilia led a group of democratic minded members in scrutinizing the proposal. Despite most of the bank’s board members being appointed by democratic governments, they were still not satisfied. Fortunately, Charles came up with a compromise for the board members of the bank to be removed by the Lower House, and this satisfied the democratic bloc.

From the Office of Chancellor Pepe, Acting Head of Civil Service

Day 6 - Afternoon - Central Bank

Over lunch, Silas shared with me a most ingenious idea of a Central Bank, which would stabilize the economy. This is truly a great innovation that should help our struggling economy to recover. Its final form is almost exactly as he had proposed. The main issue was that the extreme democrats didn't care for the long terms and unchecked independence of its board. Charles stepped in with one of his compromises and added Lower House removal, borrowed from the mechanism used to remove judges. 

Emilia seems to be more reasonable than in the first week. She took great interest in the idea, and despite some misgivings, she was willing to accept the proposal after Charle’s suggested his compromise. She was the one who convinced Robert and Tessa to go along with the proposal.

My old professor Elias was surprisingly quiet, but I guess he was satisfied with the proposal, so he had little to say except quiet approval. I know he will have much to contribute to the discussions later in the week.

Result - Consensus reached on the creation of a Central Bank as a constitutional entity.

Powers: Minting coins, printing banknotes, financial regulation, lending.

Governance: 15-member board (5 regionally appointed, 5 Directorate appointed, 5 appointed by consortium of private banks), 10-year staggered terms, removable by 60% lower-house vote.