Jewels are very important, because they are invested in magical research, and are used to get spells. In fact, your spell points depend only on the amount of jewels you invest in magical R&D.
Jewels are also important in that they constitute your nation's reserve that backs up its currency and bonds. When you issue bonds, these have to be backed up by jewels, so it is a good idea to save up some jewels, and not spend them all. (note: bonds are not yet implemented)
(We must find another use for jewels, so nations have more choices to make in spending jewels.)