When reading Harry Potter, there is an obvious amount of belief suspension that is necessary. We do not question the believability or existence of patronuses, invisibility cloaks or Floo powder. We accept that all of these are part of the magical world in which Harry Potter exists. But there are some facets of the books that, when questioned, do not make much sense. Have you ever thought about how the banking and monetary systems in the Harry Potter universe work? There are so many aspects here that are just counter intuitive, and make you wonder how such systems function successfully. Here are three reasons why the banking and monetary systems of Harry Potter make no sense.
1. The money is crazy confusing.
Okay, where to start with the plethora of impracticalities within their banking and monetary systems. There is only one bank, Gringotts, for the entire wizarding world. Are you kidding us, J. K.? Can you imagine the queues there? Let us have a quick chat about the denominations here, while we are talking about impracticalities; there are galleons, sickles, and knuts. 1 galleon is worth 17 sickles, there are 29 knuts in 1 sickle, and 493 knuts in a galleon. Wow, with those weird denominations, you have to feel a little sorry for the shopkeepers in Diagon Alley and Hogsmeade who need to give patrons change! Not to mention, the headache of working out payment, “It costs 2 galleons so if I have 14 sickles, I then need to give them how many knuts exactly?”
2. There's really no system to transfer funds?
Let's not forget that in a cash only society, you have to carry money everywhere. We know that wizards have money pouches they wear inside their robes, but it must be awfully cumbersome carrying all these coins! Another thing that seems impractical is payment – how do teachers at Hogwarts get paid? Do the Goblins at Gringotts move money from Hogwarts’ vault to Snape's? And when Snape wants to go buy something he has to go to the physical vault in Gringotts…along with every other employee in the wizarding world? You mean to tell me you can transfigure objects, but there are no ATMs, no credit cards, and only one bank?
3. Prices and values are totally inconsistent.
If you review all the times money is mentioned in the books, you will notice that the wizarding currency seems a little incongruent when it comes to purchasing power. Some things seem reasonable; hot chocolate costs 2 sickles, 3 Butterbeers at the Hog’s Head cost 6 sickles. But a wand is only 7 galleons? With 1 galleon being an estimated $25, that feels awfully inexpensive for a piece of equipment that is so integral to being a wizard or a witch. Seems a little weird in comparison, considering their advanced potion making textbooks were priced at 9 galleons.
4. There's lots of room to take advantage of the system.
There are some pretty big loopholes in the wizarding monetary system when it comes to possibilities for exploitation. Galleons, sickles, and knuts are made from gold, silver, and copper, respectively. The muggle world’s and the wizarding world’s monetary systems are completely separate. In addition, while only Goblins can make wizarding currency – they could potentially be willing to mint some coins should you provide them with the appropriate metal. Hello, arbitrage! I’m pretty surprised Harry and Hermione did not take advantage of the variations in trading price of gold to silver in the muggle world.
They could have had sickles minted from silver brought from the muggle world, exchanged them for galleons and have these melted down for gold back in the muggle world. This could then be traded for more silver than they had initially. But I suppose the ever imminent threat of He Who Must Not Be Named kept them pretty busy, with little time to exploit the fluctuations in gold and silver trading prices.