In the late 14th century, Karlovy Vary, known for its unique thermal springs, was growing in reputation as a health resort. Recognizing the potential for economic advantage and the importance of promoting wellness in his realm, Charles IV, the Holy Roman Emperor, sought to formalize the town's status. By granting city privileges, Charles IV provided Karlovy Vary with an opportunity to flourish independently as a significant center of commerce and health tourism. This move was strategic, as spas were particularly popular among the aristocracy and wealthy merchants of the time, bolstering the local economy.

The privileges included self-governance, wherein local residents could manage their affairs without excessive interference from the royal court. Furthermore, the town enjoyed tax exemptions for a specified period, encouraging more businesses to settle. Historical records suggest that after receiving these privileges, Karlovy Vary developed rapidly, becoming a hotspot for social gatherings of the elite looking to enjoy both the natural benefits of the hot springs and the social atmosphere of a newly prosperous town.

This initiative by Charles IV not only transformed Karlovy Vary into a thriving settlement but also illustrated a shift towards recognizing the importance of local governance. It was a precursor to the way cities would operate under more autonomy in the later centuries, paving the way for other towns in the Holy Roman Empire to seek similar privileges and status. The legacy of this decision persists as noted by Karlovy Vary’s continued prominence in health tourism and its cultural heritage.