[POTN] 3.11 - Establishment of the Riksens Ständers Bank

As 1667 began, the Princess Consort became increasingly loved by Swedish nobles and commoners alike. Her easygoing, down-to-earth attitude, stemming from a less luxurious childhood than many after the Orangists became out of power, was very much loved by countless Swedes.

Nonetheless, Gustav was still reluctant to hold the coronation. He believed that Maria deserved a proper coronation worthy for a Queen, but he did not wish to put an extra strain on the state budget, given the tense diplomatic situation throughout Europe, even though the Swedish finances had been improving.

Gustav, along with Kristina, spent much time working with merchants and nobles in the nation, advancing their plan to establish a central bank to entirely take over the functions of the ill-fated Stockholm Banco. After Palmstruch's mess, Gustav did not intend to trust private bankers anymore. For the central bank he was planning, what he wished to do was to hold the executive powers of the bank firmly in his own hand, shared with the Riksdag, so nobody could unilaterally decide to overprint banknotes.

It was also decided that this central bank would be the only bank throughout all Swedish realms that would be allowed to print official banknotes. Privately-printed banknotes would not be recognised as legal means to pay, and could break certain laws. Upon establishment, it would be the world's very first state-owned central bank in operation. Princess Kristina did believe that this could very well inspire other states to follow the Swedish example, allowing smoother and more centralised financial negotiations between states.

The outbreak of the Franco-Spanish War brought great worry to certain members of the Riksdag. While the war did not primarily concern Sweden, it showed to all the continent that the young French king was willing to use war to achieve his ambitions, even against fellow great powers. Indeed, Louis XIV did order for Denmark and Brandenburg-Prussia to keep their military on high alert, wary of any Swedish intervention. The fact that Sweden did intervene in the Thirty Years' War almost out of nowhere, and that France and Sweden had colonial disputes, worried Louis somewhat.

With a downsized army, of course King Gustav, and even Prince Karl, had no intent to intervene. In the years after the Northern War in the late 1650s, most of the Swedish local army had been focusing on defending the mainland in a potential war.

The only units that kept high attacking capabilities were the large amount of elite units positioned in Pomerania, designed to counter the Brandenburger threat and potentially enter the territory anytime. In fact, Prince Karl believed that the defense of the realms' eastern frontiers was actually to weak to withstand a sudden Russian offensive. Gustav, nonetheless, believed that a Russian attack was a very remote possibility unless disagreements sparked between the two nations.

The military expenses since 1662, besides maintaining the existing army, was mostly used to build new warships, but not to fight, rather accompany and protect large merchant ships travelling west to the colony of Nyfunnenland.

These all, from the perspective of King Frederik, was proof that Sweden was prone to a sudden attack by the Danes. Copenhagen began asking Paris for more and more sponsors, with the condition that Denmark would enlarge the standing navy in the Øresund.

Many Danes, influenced by King Frederik and his propaganda, were in favour of a war against Sweden to restore Scania to Danish rule. This sentiment was especially strengthened given Sweden had no armies directly to Jutland's south, unlike in the two previous wars. Frederik was also eager to establish his son, Crown Prince Christian, as a worthy successor to him for the Rigsråd. After all, the elective monarchy had just been abolished, and Frederik could not be sure that the Rigsråd would not skip Christian if they deem him too young and immature to lead a Denmark potentially in war. Frederik was planning to allow Christian to lead certain elite units in a potential war against Sweden. If he could achieve meaningful victories, it would practically remove all obstacles between him and the throne, establishing him as the saviour-King of Denmark against Swedish aggression.

Meanwhile, in Berlin, despite French pressure, the Elector, Friedrich Wilhelm, was rather hesitant about a potential war with the Swedes. He knew very well that certain elite Swedish units were placed in Pomerania and could be destructive in Brandenburg if placed under a competent commander.

Still, he had to admit that the potential acquirement of Pomerania would be more than beneficial for Brandenburg-Prussia. It could easily transform the state's fate indefinitely, elevating the Electorate from a mid-sized German state into a Baltic great power. The Treaty of Breda, concluded on 31st July, 1667, ended the second Anglo-Dutch War. Invited by King Charles II, Gustav sent a few diplomats to Breda to help negotiate for peace, allowing the Swedish officials to get acquainted with the envoys representing both England and the Netherlands.

After the peace, England and the Dutch Republic began negotiating to form a common front against the ambitious French King. Sweden, as an ally of Charles II and also a power with colonial conflicts with France, was consequently also invited to join the negotiations. Meanwhile, on 18th September, 1667, the Swedish central bank was finally established after much planning, the first central bank ever seen by the world. It was named "Riksens Ständers Bank" - "Bank of the Estate of the Realm" - after Gustav rejected certain flattering proposals to name the bank after previous monarchs of even himself.

The standardisation and centralisation of the issuing of banknotes meant that the Swedish economy would be stabilised. Gustav promised the people that all banknotes issued would be backed by silver, which meant the people could exchange banknotes to silver in state institutions anytime. After the establishment of the central bank, Gustav began sending more diplomats to the Hague. It was reported that a defensive alliance targeting France would soon be formed, and Gustav was very eager to have Sweden join in the Protestant alliance.

Gustav also sought to unite the Protestant power in the north, so to ensure there would be a united front against the Catholics should another war of religion break out. After all, the Thirty Years' War was still a bitter memory for many, and there was no guarantee that religious differences would never cause a major war again. In January 1668, a secret pact was signed between Louis XIV and Emperor Leopold I to divide the Spanish Empire between them should the sickly boy-King Carlos II of Spain die without an heir.

While it was then kept a secret, both monarchs expected Carlos to die in perhaps a few years, and the pact would be publicised right after the Spanish throne became vacant. On 23th January, a defensive pact was finally signed in the Hague by diplomats representing England, Sweden, and the Dutch Republic, under the lead of Sir William Temple, the English representative eager to ensure Dutch and Swedish support against French ambitions.

The pact, later called the Triple Alliance of 1668, was soon publicised and received much support from all three nations. The three nations also agreed to force France into negotiations with the Spaniards, so to prevent the French completely overwhelming the Spanish Netherlands. Louis XIV intended to stop the pact by bribing certain officials, but failed. He saw the pact as a great obstacle in his grand ambitions to conquer to Dutch provinces, or at least put the Dutch under French influence.

Unwilling to face Swedish opposition in the Netherlands, Louis began coordinating with the states long receiving French military subsidies, that is, Denmark and Brandenburg-Prussia, to ensure Swedish forces stay within the Baltic region.

In Copenhagen, King Frederik was practically itching for a war. He believed that, with the Swedes downsizing their army again and again, they could easily be defeated in a well-coordinated anti-Swedish offensive from different sides.

In February 1668, King Frederik ordered total mobilisation in Denmark. A decree was also sent to Norway, requiring Prince Christian to declare total mobilisation. The Storting was very hesitant, but Prince Christian declared total mobilisation on 17th February still. While he did not intend to defend Denmark for Frederik, a war between Sweden and Denmark could very well spill to Norway for whatever reasons.

Christian, after the order, replied with a letter, kindly asking Frederik for food to feed the Norwegian army. Frederik, while agreeing, only sent very limited food, keeping the bulk of it to feed his Danish elites, tasked to restore Scania for him.

In late February, Paris received reports about Frederik's plans for war. Louis XIV soon promised Frederik that the French subsidies would be doubled should a war start, encouraging him to begin a bloody war that could potentially keep Sweden out of Dutch affairs for years.

Frederik personally wrote a letter to Berlin in late February, stating to the Elector, who also received French encouragements, that a war could begins soon. Frederik advised the Elector to mobilise for the "liberation" of Pomerania. The Elector, nonetheless, was far more cautious and hesitant concerning the Swedes than King Frederik.