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Chapter 712 Financial Instruments 2
Although the interest rate of depositing silver into Sun Moon Bank is not as high as that of lending money, it is more worry-free and safer. Private lending requires the risk of losing the principal, and depositing it into a money house or bank not only does not earn any interest but also charges a handling fee.

Depositing money in Sun Moon Bank can earn at least half a cent of interest, and the risk is minimized. Unless Sun Moon Bank goes bankrupt, you can get one month's interest for one month's deposit, without worrying about the borrower not being able to pay it back, and you don't have to collect the debt, you can get the money on the due date.

There are definitely few people who are capable, powerful, not afraid of borrowers defaulting on their debts, and who can always lend money out. Most of them are ordinary businessmen who don't have much power, don't want to worry too much, and want their money to have children. So since Sun Moon Bank started the interest-bearing deposit business, more and more people have come to deposit money.

With so many deposits, Sun Moon Bank is paying out money every day to subsidize the interest. Is it worth it? In fact, this question itself is flawed.

When a bank takes deposits, it does not mean that the money is kept in the vault and nothing is done with it. On the contrary, the bank's vault is empty most of the time, with almost no excess silver except for the necessary deposits.

If the silver in the vault of a Sun Moon Bank exceeds a certain amount for a long time, the manager of this branch will lose his appetite and sleep, because the silver in the vault will not make a single penny.

If you want to pay interest, you have to lend money out to get higher interest. One of the ways banks make money is to make money from the interest difference between deposits and loans.

In fact, the ancients understood this simple truth, such as the operators of money houses and silver shops. But they did not dare and could not do so, for one reason only: if they deposited too much silver and could not lend it out, they would lose money.

The reason why Sun Moon Bank could and dared to do this was not because of Oyani's clever financial methods or high credit. A small noble from Spain had no credit in the Ming Dynasty. In addition to her understanding of banking business, she relied entirely on policy support.

When the emperor required the factories and mines in which he had a stake to settle accounts through the Sun-Moon Bank as long as they were within the four provinces of the New Deal, and also handed over the naval expenses to the Sun-Moon Bank, the bank would be invincible as long as it made loans solely based on the deposits of these enterprises and the army, as long as it was not too aggressive or too unlucky.

Later, with the endorsement of the customs, all businessmen who wanted to make a fortune by taking advantage of the new policy would choose Sun Moon Bank as their first choice for loans. The advantage of significantly lower interest rates than private lending, in turn, made Sun Moon Bank famous.

This is a virtuous cycle. With strong endorsement and the public's trust, the amount of deposits has increased significantly. With sufficient principal, the loan interest rate can be reduced, and small profits but quick turnover can be achieved.

On the one hand, it has seized part of the market share of traditional money houses and banks, and on the other hand, it has consolidated the channels for capital flow, while at the same time expanding its influence and bringing in more deposit and loan customers, and the cycle continues.

In addition, the development and smoothness of maritime transport also gave Sun Moon Bank wings to take off. It is easy to say that deposits and withdrawals are universal, but it is difficult to achieve, mainly because of the difficulty in capital flow.

Relying on the traditional way of land transportation, if you want to send the excess silver of the Guangzhou branch to the Hangzhou office, it will take at least a month, and there is no guarantee of safety during the journey. Money shops are not government agencies, and they cannot send soldiers to escort them. They can only support some people themselves, and food, accommodation and other expenses are all costs.

The Sun and Moon Bank did not need to do that. Apart from the necessary security personnel, the circulation of gold and silver was undertaken by the navy. There were always naval transport ships shuttling back and forth between coastal ports. Loading a few more boxes would not cause any delays, and safety was guaranteed. As long as the ship did not sink, no one would dare to make any bad plans.

Moreover, the speed was very fast. From Guangzhou Port to Dagukou, according to the information transmission requirements of the Naval War Guard, unless there were extremely special circumstances such as typhoons, the entire journey had to be completed within 20 days. Otherwise, even if the opportunity to fight was missed, the fighter would be punished by military law. There was no way to slow down.

Although the inland provinces rarely have business connections with the Sun Moon Bank, some people know of its existence. This is mainly due to the victory gold and silver coins. These exquisitely designed and heavy currencies will be brought in by merchants and the army, but they have basically lost their circulation function and are mostly collected as souvenirs. But why is such a powerful, unique business, and said to have a royal background suddenly openly borrowing money from the outside world? Jianghu Baixiaosheng said that it was to raise more capital to open branches in more cities.

In order to thank the people for their strong support, they specially issued bonds with a monthly interest rate of 200%, a term of one year, and a total value of 10 million taels, with a unified face value of 500 victory silver coins, which is equivalent to 13 grams according to the new law and 4 taels and cents of silver according to the old law.

It was unheard of for a money shop to borrow money from the public to open a branch. There were even more different opinions on whether or not to buy bonds issued by the Sun and Moon Bank.

Some people think that the interest on bonds is higher than that of ordinary deposits, so as long as you have spare money, you should buy some. There is a saying that if you eat well, you will not be poor, but if you don't plan well, you will be poor. It is a waste not to earn the money given for free.

Some people also think that Sun Moon Bank is lying. It is not raising money to open a branch, but it is losing capital and running in difficulties. It is trying to cover up the difficulties and rely on borrowing money to tide over the difficulties. Therefore, the risk of bonds is very high and cannot be bought. Not only can you not buy them, you have to quickly withdraw the money you deposited in Sun Moon Bank.

Even if you withdraw the money before the deposit term, you will lose interest, but it is nothing compared to the principal. If Sun Moon Bank really goes bankrupt one day, it will be extremely difficult to get the principal back.

What's more, the head of the Sun Moon Bank is a Western woman. If she gets on board the ship, not only will the common people and the government be helpless, even the navy won't know where she has gone.

The majority of the people in the four provinces that adopted the new policy were optimistic and had more or less contact with Sun Moon Bank. They believed that the worry about the bank's collapse was completely groundless.

The reason is simple. There are many factories, farms, workshops and even ships in the four provinces, all of which were purchased with loans from the Sun and Moon Bank, and were also backed by taxes from customs and government as well as military expenses from the two naval forces.

Even if there is a shortage of funds, it will not last too long, let alone hurt the vitality. If even the customs and the navy are not trusted, why should we trust the new policy? We might as well close the factories to avoid sudden bankruptcy and loss of capital.

Most of the people who are pessimistic are concentrated in Jiangsu, Zhejiang and the mainland. Some of them believe that borrowing money to start a business is definitely not a good thing, so they should stay away from it if possible.

Some of them were operators of money houses and silver shops, and they were in competition with the Sun Moon Bank, and they did not want to see their rivals expand. Even if they were trying to dismantle each other, they had to pretend not to understand and shout the loudest at this moment.

In fact, in addition to the two very clear views of support and opposition, there are also some people who hold a neutral attitude. Their composition is more complicated, including merchants from the four provinces of the New Deal, gentry from Jiangsu and Zhejiang, and many officials, including some royalists.

These people have either been in the business world for many years or in the government for a long time. The reason they can remain standing is that they are meticulous and rigorous in their work style, and they never easily express their stance.

After experiencing many changes during the Jingyang years, although I still can't fully understand the context, I have learned a lot of experience or lessons. I know that the current emperor often uses strange tricks and does not follow the ordinary path. What ordinary people can see is just the appearance, and the core is often the opposite. Before you fully understand it, it is best not to act rashly.

(End of this chapter)