A History of the World in 100 Objects - Dr Neil MacGregor [250]
What the card does of course is to guarantee payment. A complete stranger can be confident that he will ultimately be paid. For Mervyn King, Governor of the Bank of England, these cards are merely a new solution to an age-old problem:
As in all types of money or cards used to finance transactions, the acceptability, the trust which the other side of the transaction puts in it, is paramount. I could give a different example, which I think illustrates the importance of trust here: when Argentina had its financial collapse, and reneged on its national debt, in the 1990s, its currency became worthless, and in some of the villages of Argentina the use of IOUs as a substitute for paper currency started to grow up. But the problem with the IOU is that the U has to trust the I, and that may not always be the case. So what happened was that in the villages some people would take the IOU to the local priest and ask him to endorse it. Now here we have an example in terms of the use of religion that was not fundamentally about religion as such, but which was about enhancing the trust that people had in the instrument that was being used.
In the absence of a village priest with global reach to endorse our IOUs, we use credit cards which span the world.
This credit card, issued in the UAE, has both English and Arabic writing on it
This particular Gold Card is issued by the London-based bank called HSBC, the Hong Kong and Shanghai Banking Corporation. It functions through the backing of the US-based credit association, VISA, and has on it writing in Arabic – it is in short connected to the whole world, part of a global financial system, backed by a complex electronic superstructure that many of us barely think about as we key in our PINs. All our credit-card transactions are tracked and recorded, building a huge dossier of our movements, writing our economic biographies on the other side of the world.
The scale of modern banks is far beyond anything previously known, and their global power now transcends national boundaries. As Mervyn King emphasizes:
The spread of a wide range of financial transactions, whether using cards used by international banks or the other services that they offer, has created institutions which are trans-national, which are bigger than the ability of national regulators to control, and which, if they do get into financial difficulties – fortunately not many have – can cause enormous financial mayhem.
In the past rulers could walk away from their debt and leave banks to collapse, but today, it is apparently more difficult to allow a bank to fail than it is to see a government fall.
Some aspects of a credit card need no describing. Every credit card in the world is of the same internationally agreed size and shape, to fit in all the ‘holes in the wall’ that now puncture our urban world. In one respect, cards are like traditional coins and banknotes. They have two sides, each holding important information. If you turn this card over, the back shows us a magnetic strip, part of the electronic verification system that allows us to move money around the world relatively securely and permits instant communication, instant transactions and instant gratification. Many cards now incorporate an even more sophisticated piece of electronics, a microchip. It is this microtechnology, one of the great global achievements of the last generation, that has made the worldwide credit card possible – and with it, the worldwide banks. This little black strip is the hero – or villain – of this chapter. All the rest is simply a consequence of it.
Credit cards do something which for most people was never possible before: they allow you to borrow while