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This question got me thinking, about the nature of currency and space.

When Qui-Gon tries to buy ship parts from Watto he gets this response.

Qui-Gon Jinn: I have twenty thousand Republic dataries.

Watto: Republic credits? Republic credits are no good out here.

Why are credits no good? Even if they are not a local currency it is likely they could be exchanged. Tatooine is not a lawful planet so even if it was outlawed somebody would buy them at an exorbitant exchange rate.

In the real world, many countries do not have the US dollar as a currency but you can still use it to buy things. Or exchange it for local currency.

The Republic still exists and Republic worlds accept credits, so even outside of the Republic credits should still have value.

It was the largest most stable (up to that point) political entity. So in theory Credits should have more value than the Hutt controlled Wupiupi (I can't imagine the Hutts are too worried about inflation and would mint coins when it suited them)

Yes, space is big, but in the Star Wars universe, it is also easy to traverse, so you can get a bunch of credits and go to a republic planet to use them.

There is, of course, the obvious out of universe explanation that if credits were valid, Qui-Gon Jinn would not have picked up Anakin and the galaxy would be saved.

But in universe is there a reason that credits could not be used on Tatooine?

Voronwé
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Jeremy French
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    The question is how totalitarian the Hutts are about ruling their worlds. It might be difficult (or too much of a hassle for Watto) to exchange credits if they have been banned by the Hutts. It might be a risk/reward problem in that case and he might not be willing to sell it for "just" 20000 credits instead of a lot more. – Adwaenyth Jul 07 '17 at 10:11
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    Or there could be local infrastructure needed for credit trades or some way they could not be transported/transferred outside of the republic? I never underestimate the ability of people to add reasons for such things in the EU. – Jeremy French Jul 07 '17 at 10:13
  • @Valorum but it was all about the deal. If they had some value he would have asked for more, but he was pretty insistent they wouldn't do. Suppose we are lucky he didn't just trade Jar Jar or Padme. – Jeremy French Jul 07 '17 at 10:39
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    Goes hand in hand with the question of why Watto was the only one in the entire city who could sell them the hyperdrive they needed, despite Tatooine presumably being close enough to Naboo that they could make the trip with a damaged one.. – Annatar Jul 07 '17 at 10:40
  • And you would have thought that he would have been happy to offload it, I'm sure damaged Nabooian ships didn't come along that often. – Jeremy French Jul 07 '17 at 10:42
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    Probably because many inhabitants of Tattoine were wanted by the Republic, and could not use Republic credits as they could get caught. Also we do not know if Republic credits are cash, or other instruments of payment that could be traced (in some Legends books, Galactic Credit transfer looks like electronic payment in our world). – TimSparrow Jul 07 '17 at 11:19
  • Hm, I wouldn't say out of hand Hutts don't control the money supply well; they're gangsters, not idiots. – Azor Ahai -him- Jul 07 '17 at 16:18
  • I'll just add that if a currency/economy is relatively small, having offworlders come in and exchange their boundless wealth for your currency could severely deflate it and upset the market. It might be good policy especially if offworld trade is at a minimum. – BlackThorn Jul 07 '17 at 16:42
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    If your local currency is extremely sensitive, then it's more likely that you'll just use that of the economic superpower. Around 10 countries use the US dollar officially, another 30 unofficially, and 27 currencies are pegged to it because it is commonly accepted to have value because it will remain stable. Those include countries that have philosophical divisions with the US (Venezuela) or ones that we've went to war with (Iraq, Afghanistan, including before their government was toppled in 2001-3) – Nick T Jul 07 '17 at 20:47
  • "the galaxy would be saved" Or maybe not saved. It doesn't seem Anakin was completely vital to Palpatine's plots, just that Paplatine considered using him the best way to achieve his ends. – jpmc26 Jul 07 '17 at 23:16
  • @jpmc26 no Anakin and Palpatines arrested would have gone quite differently. – Jeremy French Jul 07 '17 at 23:27
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    @JeremyFrench I'm quite confident Palpatine was clever enough to figure out a way to ensure it still ended well for him. The entire course of the war probably would have gone differently (Maybe he would have engineered for the CIS to win; who knows?), but that doesn't mean Palpatine's plans fell apart completely without Anakin. Keep in mind that the Clone Army was commissioned before Anakin arrived on the scene (during Valorum's term), which suggests that Palpatine already had plans to kill off the Jedi before then, too. – jpmc26 Jul 07 '17 at 23:49
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    One thing we cannot know by the dialog, as given, is the definition of "out here". Credits aren't accepted in that town, out on the fringe of a fringe planet? Or on the fringe planet at all? Remember, it's a Hutt planet and the Hutts' are in it for the money, period. And not from long term, make our planet the place we want everyone to come, but from the "any transactions that are made have to go through us" worldview. – CGCampbell Jul 08 '17 at 11:59
  • Responses to this question should consider the distinction between "worthless" and "worth less". If the Republican credits are literally worthless, then you can't buy a stick of gum for all of the Republic's money, which, if true, would be an entirely different situation from vendors just not accepting Republican credits at the typical change rate. If "twenty thousand Republic dataries" is a lot of money, then it'd be weird if he couldn't use them at all. – Nat Jul 08 '17 at 12:33
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    Why do you assume that "no good out here" actually means that nobody out here (whatever "here" means) will accept them? Maybe that's only Watto's way of saying that he personally does not wish to deal with the hassle of finding a buyer who will exchange and/or "launder" them. – Solomon Slow Jul 09 '17 at 22:48

6 Answers6

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There are many reasons for not accepting foreign currency which apply in this situation as they apply in the real world case.

First, normally local traders only accept local currencies. In the UK, save very specific places, you can only pay with pounds. Sure you can exchange somewhere else, but the trader himself will not take it.

There are practical reasons in the real world: it is difficult to be up to date with the current exchange rate and real value of the currency, identifying the authenticity of the currency itself is difficult and you can find out you've been ripped off. After all is way easier for me to pass on a fake euro as real if your actual currency is not euros. If you accept foreign currency you're also increasing your cost and your risk. You get some money that you won't be able to use straight away; you need to exchange it to local currency (at your cost and expense), that takes time and on the meantime some catastrophe can happen devaluing the currency itself.

For any local trader accepting only local currency is always best save touristic places (not the case).

Then there're also in universe practical reasons. If you live on a place controlled by the Hutts you don't want to be drawing attention to yourself and specially you don't want to attract the wrong kind of attention.

Trying to exchange a lot of Republic Credits out of the sudden is bound to raise a couple of eyebrows; where is that money coming from? Is he smuggling behind my back? Is he having dealings with the Republic to interfere with the Hutts, maybe to bring us down? Better to simply silence him all together…

So generally speaking Watto had a lot of good reasons not to accept foreign money and, specially, republic credits. It is probable that people who do end up ripped off, dead, or both.

Quentin
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Jorge Córdoba
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    While I'm not sure it applies to Star Wars, another problem would be change. Unless all foreign currency transactions are exact, you're unlikely to be able to offer change in that currency. – David Starkey Jul 07 '17 at 14:36
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    I keep thinking of someone coming to the US and trying to buy a car with North Korean Won... – CGCampbell Jul 07 '17 at 14:43
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    Assuming credits being some kind of "digital" currency, it could also be that they lack the technical facilities to process the transaction. – PlasmaHH Jul 07 '17 at 14:51
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    good start, but not a full answer I think. You explained why he wouldn't accept the credits directly, but not why the Jedi didn't go to a currency exchange location to exchange credits for local currency then come back with local currency to pay for repairs. I'd imagine that's a combination of Jedi not wanting to draw attention with so many credits, the Hutts monopoly either refusing credits or charging an absurd fee for the exchange, or difficulty of a 'criminal' empire needing to somehow launder their credits before using them – dsollen Jul 07 '17 at 16:59
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    @CGCampbell I think comparing to KPW that would seem to imply that the Republic aggressively tries to isolate them, and succeeds, rather than it just being unregulated like the drug trade (which permeates everywhere). I would compare the Hutts to the Hills of Columbia. Smuggling and such implies that you're making forays into space where whatever (the item/the transaction) is illegal, so you're going to interact with the credit banking system. Having a supply of inconspicuous, regular money would be advantageous then. – Nick T Jul 07 '17 at 20:36
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    @CGCampbell Going to North Korea and trying to buy a car with USD is probably the more apt comparison, modulo sanctions and such. This article has a bit more to say about that. – chucksmash Jul 07 '17 at 21:06
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    Buying tomatoes from the local street market every Sunday with Bitcoins has proven difficult, so far. – Ghoti and Chips Jul 07 '17 at 21:12
  • @NickT I think you've got that a bit backwards. In every case it's the Hutts doing the isolating. They want complete control over the economy, so that wherever there is a credit to be made, they're getting a cut.The Hutts don't want Watto to be making an exchange of services for value directly with their customer (Jedi). They want the isolated population to need to come to them first. If Watto accepts the Rep Credits from the Jedi, then that is a transaction the Hutt's did not profit on. – CGCampbell Jul 08 '17 at 11:55
  • @DavidStarkey in many earth countries where shops accept foreign currency, you'll get your change in local currency. – Paŭlo Ebermann Jul 08 '17 at 16:08
  • I'm in the UK and I travel to Uganda quite a lot - it's illegal to take Ugandan Schillings out of the country, so you end up in a situation where you can't buy or sell any in the UK, currency exchangers simply don't carry them and won't accept them. I must have a few hundred pounds worth that I can't do anything with until I go back to Uganda... – Moo Jul 09 '17 at 01:38
  • Many shops in the UK are happy to accept euros, and not just in touristy places. It's particularly common in border towns, such as Newry. – TRiG Jul 10 '17 at 00:12
  • @CGCampbell Alternatively consider the Deutsche Mark in the German Democratic Republic which fits this scenario partially: (1) If the authorities learned that somebody dealt with a large amount foreign currency, especially DM, she would surely attract unwanted attention. On the other hand the general state of the market and proximity to the country minting the DM made it highly valuable on the black market. (2) However, since there was officially no market economy in GDR (as opposed to Tatooine), accepting or spending large amounts of foreign currency often involved a crime, e.g. embezzlement. – David Foerster Jul 10 '17 at 09:07
  • @GhotiandChips 5 years on, and no closer :D – Moo Jul 11 '22 at 02:23
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It's important to note that Tatooine had an extensive black market economy. Republic credits were often electronic (although not exclusively), meaning there was a trail of whomever possessed it (Qui-Gon offered 20,000 credits to Watto, which was almost certainly electronic). The Hutts issued their own currency, the Wupiupi, which seems to be purely physical (which is better suited to a black market economy).

DavidW
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Machavity
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In the question, you draw an analogy between Republic credits and the US dollar. I think the more relevant real-world analogy is the Zimbabwean dollar, i.e., fiat currency with little to no real worth.

As Watto said:

"Republic credits? Republic credits are no good out here. I need something more ... real."

Out of universe, this line wasn't necessary to the plot; given the circumstances of the Queen's escape from Naboo, it wouldn't have been implausible if they simply didn't have enough cash on them. The real purpose, in my opinion, was to provide a foreshadowing of the sorry state the Republic was in. Granted, it was the Republic's political problems that were important to the plot, rather than the poor state of their economy, but the one and the other often go hand-in-hand.

[NB: I'm taking a strictly movie canon perspective here; the broader Disney and/or Legends canon may differ.]

Harry Johnston
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    The Republic had been around for a very very very long time at this point; certainly much longer than the US and almost as long as civilization on Earth. Why would you expect its currency to be vulnerable to hyperinflation? I would expect its currency to be as stable as it was possible to be. – kingledion Jul 08 '17 at 17:58
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    @kingledion, I don't see how the age of a civilization is relevant to the state of its economy. Greece is considered the cradle of Western civilization, but that didn't stop its economy from melting down earlier this century. – Harry Johnston Jul 09 '17 at 01:33
  • The US dollar is also fiat currency, so I think the comparison holds. – Brian McCutchon Jul 09 '17 at 05:42
  • @Brian, yes, they're both fiat currency in the technical sense, but the US dollar is nonetheless considered robust. That doesn't seem to be true for the Republic credit. I'm aware of no evidence that this is specific to Tatooine, I don't think Republic credits would be accepted on any planet that isn't either part of the Republic or (perhaps) actively trading with it. – Harry Johnston Jul 09 '17 at 06:00
  • @HarryJohnston Greece has not been a single polity for all that time. The Republic, as far as I can tell has had an operating elected Senate for 5000 years or so by the time of the movies. That is longer than Rome's senate operated (~500BC ~0AD) or the US's senate (225 years and counting). – kingledion Jul 09 '17 at 18:54
  • @kingledion, OK, but I still don't see that how that is relevant to the state of its economy. Are you saying that it is impossible for a polity more than X years old to have a weak currency, no matter how incompetent the government is? (Granted, in the real world there does seem to be a correlation, which is very interesting - but did George Lucas know that? Plus, of course, circumstances are different.) – Harry Johnston Jul 09 '17 at 21:55
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Try going to an undeveloped region outside of the big towns only with your American-Express card. Try to get you car fixed there at a small local workshop. See how they won´t care if it is gold or black or whatever if it is only a small little plastic card. They´ll need something more real. (For example Rodrigues Island - try getting lunch outside the main "City" without hard cash)

Credits no good without connection to international banking system!

Daniel
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    I would kind of understand this, but Qui-Gon said he had them. I'd assume on a more civilized planet he could just use the Jedi order Corporate Card. – Jeremy French Jul 10 '17 at 09:05
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    I imagine having money does not necessarily mean having physical "coin". A Republic so developed as this would have some technology like bitcoin to not carry around lumps of cash all day. – Daniel Jul 10 '17 at 10:27
  • Also from a story standpoint this clearly send´s the message that you are really far out. Everyone who has traveled has had that experience where you are at least uncertain if your usual means of payment will work and most have some sort of backup like traveler checks etc. - now the trip to Tatooine was entirely unplanned and as such no preparations of that sort where made. – Daniel Jul 10 '17 at 10:32
  • To give a real world example, many years ago I traveled to the US. It was after electronic payment via bank card had become ubiquitous in Canada, but hadn't yet spread entirely through the US: if you wanted to pay by card, you had to either use a credit card or special debit card. I didn't realize this until I tried to pay for a meal in Maine, and didn't happen to have a credit card. I had over a $1000 in the account, but at that moment it was no good to me. I ended up having to go to an ATM to withdraw American currency. – Keith Morrison Dec 02 '20 at 01:36
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Tatooine is in the outer rim of the Star Wars galaxy. As an example, let's say that you live an hour away from the nearest gas station at freeway speed. And suppose that a stranded motorist offered you $20 for your last 1 gallon of gasoline. Ignoring any inclination you might have to be a good samaritan, in a strictly economical sense, and without consideration to any other factors, this would be a good score on your end. But considering the fact that you live out in the middle of nowhere, have to spend 1 hour driving to the gas station, pay extra for the gas that's sold out in the middle of nowhere, and drive an hour to get back home, suddenly that $20 doesn't really seam like a good deal for you anymore. Even more so if it's your last gallon of gasoline and you would have to walk the 60 miles to the gas station. What is more "real" that Watto refers to is likely bartering. Sure, $20,000 republic credits is probably a lot of $ in the Star Wars universe, but cash isn't always the most practical way to trade.

apocalysque
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    Not a great analogy. If you really live that far from a gas station, then you or someone you know probably has their own gas tank in the yard. Filling that up every couple of months with 500 gallons or so (at $3 a gallon) means that you'd be happy to sell a few gallons for $20 a gallon to make a profit. So it would be with exotic spaceship parts on systems far distant from the exotic spaceship parts factories. Its not like Watto needed those parts to get home – kingledion Jul 08 '17 at 18:01
  • How is this not a good analogy? Tatooine, being in the outer rim, is not within the republic's sphere of influence. There's even a direct quote in the movie that explains this to you "The Republic doesn't exist out here". Now do you understand? Sure, Tatooine is a de jure "republic" planet, but everyone knows the de facto rulers of Tatooine are the Hutts, and they have their own currency. It doesn't matter how much republic credit Qui-Gon offers, they're no good to Watto. – apocalysque Sep 07 '18 at 09:20
  • What better deal was Watto going to get for his parts at some broken down outpost in the middle of nowhere? That is why Watto would have taken the credits; he could have found a way to cash them with someone headed to the inner systems. – kingledion Sep 07 '18 at 11:57
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Many outer rim systems don't accept republic credits. Probably not many opportunities to exchange for local currency, and I also believe the outer rim systems aren't huge fans of the republic according to lore so a resistance to adopting their currency system could make sense.

Schrodinger'sStat
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