Sock Under The Mattress
Ankh-Morpork is a city where, for the majority of its inhabitants, the dollar is a theoretical notion, and virtually all transactions are done in small coin.
This seemingly unimportant fact has hitherto escaped the notice of the people who make the city's financial and economic decisions, as (let's face it), people who are in a position to influence the city's economic policy are very, very, rich and influential. People who are, on the other hand, poor, by definition have no influence and are beneath the notice of those who consider themselves to be the social elect. Poor people are invisible, save when it comes to collecting the rent, and what they do with any surplus income they may have has traditionally been beneath the notice of the rich, unless its's formulated as "Hmmm, if they do have spare money, then evidently they can afford to pay a higher rent".
As the banking system has traditionally been owned by, and used for the benefit of, the seriously rich, the idea of poor people having bank accounts would be laughed right out of the Mint. And, as Topsy Lavish remarked, nobody with an annual income of a hundred and fifty dollars or less opens a bank account - what's in it for them? More to the point, (in the words of Roundworld comic author Douglas Adams), "the banks refuse to deal in fiddling small change". This is, Topsy said, why socks and mattresses were invented.
Therefore for most people, the all-important bank is the the Sock Under The Mattress. This allows a degree of autonomy, it puts something away for the proverbial rainy day (despite the fact that for many citizens, life is a torrential monsoon virtually every day), and at least gives the illusion of security.
Herein lies several problems. Most people deal in small coin and rarely see dollars. Therefore, the more small coin taken out of circulation, the more new coins the Mint has to produce to replace them. As we have seen, the manufacture of currency presents economic problems of its own - the more that needs to be made, the higher the drain on the City's resources.
And, as Hubert Turvy, the city's (so far) sole economic expert has proven with the assistance of the Thing in the Cellar, the more money goes under the mattress (Flask twenty-Eight), the less money there is available to fund new investment, research and development, business expansion, et c (Reservoir Eleven), and the consequences are foreclosures on existing loans(Flask Nine), collapsing businesses (the vernier scale on the left of Flask Seventeen), job losses(Flask Seven), a catastrophic loss of demand, all those little Socks Under The Mattress come out all at once, and flood the economy with long-withheld cash at a time when there are less and less goods produced for that money to buy, thus fuelling inflation... and, in a word, Recession.
It falls to a dangerously radical thinker to reform the banking system to prevent all this from happening. His solution is simple, but outrages traditionalists. Why doesn't the big central bank become one super-sized Sock Under The Mattress? Proving again that he is a Discworld analogue of Anthony Crowley, the Master of the Royal Mint argues that hitherto, banking has thought it sufficient to attract, for arguments' sake, five rich men each willing to deposit half a million dollars. Surely the same liquidity can be achieved by half a million very small accounts, each of at least five dollars? What if we attract all those little socks under the mattress to come to us, by offering interest on a current account, say five per cent to start with? Regard the potential - these little accounts will in time become bigger ones. Five, then ten, then fifteen dollars, with a beneficial effect on our reserves and on our ability to lend. Also, the interest we pay on those accounts will mostly stay in our bank coffers - effectively we are making money from nothing, and will be able to lend out more, on the basis of having more security to back the loans with. Which means more interest returning to us. These small accounts are like planting seeds - we are the gardeners!
And look at the rewards on lending - Harry King wants a hundred grand, Vetinari himself wants to prime the Undertaking with half a million. And regard the fringe benefits: if all that small coin returns to us, then the Mint needs to produce only a fraction of its current output, thus bringing a big State expense under fiscal control. And then we control the money supply - the rate at which large amounts of small coin re-enters circulation. This puts a brake on inflation.
Gentlemen, for that size of Sock, and the benefits it confers, I am willing to suffer vertigo by sleeping over a mattress a third of a mile high...