The Medici and the Iron Bank
Two truisms govern the financial world of Westeros: 1) A Lannister always pays his debts, and 2) The Iron Bank will have its due. The Iron Bank lurks behind the scenes from the very first season. Ned arrives to find that the Throne is in considerable debt, owing half to the Lannisters and half to the Iron Bank. Even Tywin, the all-powerful paterfamilias of House Lannister, fears the Iron Bank, acknowledging its power as a monolithic entity that can neither be evaded, lied to, or avoided.
Institutional money lending stretches back well into antiquity, with interest rates required on gold deposits in Ancient Mesopotamia (2,000 BC) and examples of pawnbroking attested in Classical Greece. But we don’t see anything quite as formidable as the Iron Bank until the Medici, in 15th century Italy. Combining sound financial investments with political cunning and pure luck, the Medici family went on to finance (and indeed produce) popes, and bankroll kings. The money they used, however, they poured back into their city, Florence, partly to keep up the façade that the city was still a Republic and there was no all-powerful ruling family.
The Iron Bank of Braavos makes a strong appearance in the seventh season, represented by Mycroft Holmes (in disguise as Tycho Nestoris). One way they make their fortunes is by financially investing in those they think will ultimately win or, as Mycroft Holmes puts it, investing in “endeavors we deem likely to be successful.” But, as the show makes clear, the vicissitudes of war are the biggest enemy of certainty. After being persuaded by Ser Davos, the Iron Bank invested considerably in Stannis Baratheon. But his decapitation led to him defaulting on his debt.
We have parallels between the Iron Bank and the Medici during the War of the Roses. The Medici’s London branch got into serious trouble after lending to the usurper Edward IV, who owed the Medici 10,500 pounds. He ultimately defaulted, as did his enemies, the Lancastrian Rebels, who also owed the Medici a considerable amount but never saw to their debt being repaid. This failure brought business at the London Branch to a close and marked the beginning of the end for the Medici’s monopoly over European banking.