Without the ability to mass print standardised notes, Mr Palmstruch and his followers would not have been able to revolutionise the payments market in the way they did. Similarly, the telegraph not only improved settlement of payments within the Fed system, but also transformed long-distance foreign exchange trading. Some of you may have heard the expression ‘trading the cable’. The phrase had its origin in the mid-19th century when the transatlantic telegraph service radically upgraded international communication. Obviously, this hugely impacted the quoting of exchange rates across the world. Since then, the FX rate between British Pound Sterling and the U.S. dollar has been referred to as ‘the cable’. The way that technological developments impact payments has been particular clear in recent years. The internet and improvements in telecommunications have brought new ways of purchasing goods and services in the form of e-commerce and mobile commerce. Along with this, we have seen large shifts in how consumers pay for their purchases and how we transfer money to one another. It is a bit of a platitude, but still worth highlighting that the speed of innovation has been greater than ever in recent years. A further driver of changes has been humanity’s ability to see needs and demonstrate entrepreneurism. The history of payments is full of examples where people with great ideas have solved problems or inefficiencies in the market. From time to time, this has even led to new types of financial business that we recognise today.
Also ‘clipping’, that is, shaving off part of the material, was fairly widespread. This led to a phenomenon that many years later became known as Gresham’s law. It says that in commerce ‘bad coins’ drive out ‘good coins’ as the latter are kept for saving purposes. Mistrust in the coin system, or even its entire breakdown, was often the unhappy consequence. Another issue was the plethora of mints that continued to grow in number as technology spread. Fast forward, and at the mid-medieval period it had become fashionable for every European kingdom and principality to issue its own coins. With production costs lower than the coins’ value, this was a useful source of income to finance the frequent wars at the time. But with multiple coins drifting around and uncertainty about their true value, it was essentially a mess. However, where there is chaos innovative minds see opportunities. During the 12th century, in the northern part of Italy, a new type of institution emerged. These specialised in exchanging foreign coins for local ones, not unlike present day foreign exchange dealers. This reduced the problem with the many coins causing much confusion. Even more advanced, some of the new institutions started to swap coins for bills of exchange that could be used in local trade. 3 [15]  The medieval coin-exchange providers brought banking to Europe, it is often said. Initially, they only handled deposits, as charging interest was viewed as usury by the powerful church.