Practice question · Multiple choice
The commercial revolution created instruments that accommodated the Church's ban on usury rather than abolishing credit. How did the bill of exchange achieve this in practice?
Hints
- Did merchants eliminate credit, or change the legal category under which it was recorded?
- How might shifting money between different regional currencies alter the explicit nature of a loan?
Show the answer
A. By moving funds across currencies to disguise the charge for credit
Why
Bills of exchange converted lending into a currency exchange transaction, concealing interest within exchange rates. The ban did not halt credit or require special charters; instead, it prompted merchants to devise legal fictions that decoupled profit from direct interest.
Practise Towns and Commerce, Eleventh to Thirteenth Centuries
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