European Financial Emperor

092 Be the standard (2)

Lee Hwan asked the soldiers to give out alcohol as a credit within the monthly salary limit, and the credit was billed to the country they belonged to.

This policy has been extremely popular with neighboring countries.

In this era, it could be seen that managing the salaries of soldiers without knowing it determines the victory or defeat of the war.

No matter how loyal the soldiers were for the country, they did not move unless their pockets became thick in the end.

Therefore, a large part of the war funds went out as salaries, and the biggest problem for the state was to procure this money locally.

If Hana soldiers squander their salaries in Utah’s nightlife districts, the state will be able to pay off a lot of debt to the soldiers.

Although interest of more than 8% per annum will be accrued as a condition of issuing bonds and bills to East Bank to prevent them from returning, the US, France, Spain and Mexico are actively engaged in East Bank’s salary conversion service because it can increase the morale of the soldiers. was used to

“Your bonus to be paid at the end of this month will be paid in silver. Isn’t that convenient?”

“Sure. Gold coins became too burdensome, so I didn’t use them well. It is inconvenient even when giving performance pay to employees.”

After Lee Hwan dispatched the first gold mining expedition, gold veins were discovered in mines around Montana.

As a result of these continuing discoveries, Eaststellar’s estimated wealth was now more than enough to weigh on the British royal family.

There was probably no family or institution that could match Lee Hwan’s wealth except in the Netherlands.

There was a lot of gold circulating within the company, but the local community was experiencing some inconvenience.

Converting currency to be used in daily life was not as easy as I thought.

“Gold is good, but it is inconvenient.”

“Well, you don’t have to worry about that.”

“What sharp numbers do you have?”

“The Baron found silver mines around Utah.”

“Aha!”

“A lot of silver coins will be in circulation soon. I have good gold coins that were previously issued. It could be worth it.”

If the money supply of silver coins increases, it will naturally decrease in value.

It could be thought that this would come to a disadvantage for East Stellar.

On the contrary, if the money supply of silver coins increased, Eaststellar would have absolute power.

“Soon the Baron will take over the financial districts of England, the Netherlands and Germany. Probably North and South America as well. Then your life will be much better than it is now.”

“After all, you should know the skill of the Baron!”

Lee Hwan’s name was getting bigger and bigger.

***

It was July 1827, at the height of the war.

Rumors began to circulate that there was a shortage of gold in the colon market in Western Europe.

Recently, the mobilization of military supplies increased due to the fierce war between the Northern German Commonwealth and the Southern German Allied Forces.

Taken from readwn.com

Moreover, the problem was that East Stellar had recently delivered large amounts of gold coins to the Netherlands and England, but they did not flow into the bank and went straight to the battlefield.

As gold was scarce, interest rates in the market gradually rose, and the value of banknotes and bonds began to plummet.

Hans Morgan, the new head of Eaststellar Finance Europe’s office, reviewed the pile of colon applications.

However, after all day review, there was no end to it.

Because all the banks in Western Europe were lining up to borrow money from East Stellar Finance.

“I lack too much gold. If we keep going like this, we’re going to lose a lot.”

For a bank, lending as much money as possible would be the best virtue, but more important than that was the collection of bonds.

Recently, Lee Hwan has set the ratio of equity to risk assets of banks as the biggest measure of credit rating.

In a word, it was said that the key was how healthy the loan invested by the bank was and what the ratio of equity to it was.

Such a paradox of Lee Hwan could not be emphasized over and over again when the financial market is unstable as it is now.

“I think we should raise the colon rate a little bit more.”

He got up from his seat and went down to the first floor with a colon board.

Affiliates of East Stellar Finance adjusted the interest rate of Colon 16 times a day in real time, and the rate was to change according to the currency value and creditworthiness of each country indicated right next to the board.

Bankers provided information by jotting down today’s colon rates on boards and changing the board in real time.

The current currency value and credit rating given by ESM were also converted into accurate figures and announced, and converted into a graph.

As Hans Morgan descended to the ground floor, the air was filled with murmuring, as if he had been to a grain auction.

From people who came to change business funds, to people from banks and safes, there was no riot.

Hans Morgan also mixed with the crowd and fixed his gaze on the board.

ding ding!

It is now 2:30 PM, and it is time to change the board.

Bankers began to jot down the colon rate, based on the data ESM telegraphed on creditworthiness and currency valuations.

Standards for understanding each person’s credit rating were specified on the board, and a simple formula for calculating interest rates by estimating creditworthiness and monetary value was written underneath.

People started flipping their abacus accordingly.

Abacus started to become popular in the financial market not long ago, because bankers of East Stellar Finance carried several abacus.

Europe has a tendency to follow and watch Eaststellar unconditionally.

Hans Morgan looked away from the board.

“The important thing is not raising or lowering interest rates. We have to find ways to fundamentally reduce the risk.”

Recently, the credit rating of banks has fluctuated, leading to high-interest rate colonies.

It was to prove that finding money in the market is just as much picking up stars in the sky.

Hans Morgan, who stepped out of the hustle and bustle of the interest rate board and returned to his office, decided to put pressure on the banks that took the colon to repay.

In a letter to each bank, he wrote that he would immediately withdraw the funds unless the equity ratio was adjusted.

Hans Morgan, who stamped the letter with a gold albatross, symbolizing Eaststellar finance, sent it straight away.

Then he left a short message to Lee Hwan.

[I acted according to the instructions given by the baron.]

***

Lee Hwan, who heard of East Stellar Financial’s austerity policy by telegram from Rietterkirk, smiled softly.

“You made a bold decision.”

Hans Morgan’s austerity policy now established a rule that a bank must meet a certain ratio of equity in order to borrow money from it.

If that is the case, banks will be scrambling to recoup their investments and roll up their arms to recoup loans.

This would reduce the money supply in the financial markets, and it was clear that interest rates would rise more and more.

What would happen if Lee Hwan introduced gold coins into the market at this point?

“England or France will no longer have central banks.”

In this time when the value of the currency has fallen to the bottom, gold coins imported from the Americas can be released, and a profit of 4-50% can be achieved.

No, maybe you can make a much bigger profit than that.

This is because it is not easy to obtain gold even if you bring a wagon of banknotes.

a few days after that.

Indeed, a black shadow has been cast on the UK financial markets.

Banks collected loans to businesses and individuals and demanded repayment of bonds from the state.

As a result, bond prices fell sharply.

In particular, the price of consoles plummeted.

The console is a perpetual government bond, in which the bank is not obligated to repay, but instead pays interest at a fixed rate every year.

By selling the consoles, the central bank was able to convert non-repayable bonds into circulation and to settle debts caused by wars and recessions.

Wars and colonial rivalry were leading to the collapse of the British royal family’s finances, which could not be afforded by the colonies’ tax and trade gains.

To solve such a burden, the console was made and turned, but now the price was hitting the bottom.

The sharp decline in the pound and the console further accelerated the cooling of financial markets and even affected the stock market.

Around that time, people came to Lee Hwan’s office from early in the morning.

He was from the UK Treasury.

The British told Lee Hwan a bit of an embarrassment.

“Please establish a bank that can issue a unified currency.”

“… … What do you want to establish?”

“Are you already encroaching on European finance? If that’s the case, why not set up a central bank that can cover all of Europe right now?”

No central bank for the state, but a financial institution that unifies Europe as a whole has yet to exist.

If Eaststellar could play the role of a central bank, it would be able to achieve much greater profits than it is today.

However, the role of the European Central Bank did not end there.

“If you, as governor of a central bank, issue a currency, we will increase its value so that we can profit from it.”

“A central bank with a private issuer?”

“Our country will buy public currency from your central bank and use it as currency, and through the exchange of bonds and bills, the central bank will have absolute influence.”

Issuing banknotes was not simply printing out a piece of paper with money written on it.

In Europe where the gold standard exists, recklessly printing paper money could cause bankruptcy and serious economic crisis.

Therefore, the British establishment of the Bank of England on the gold standard was predominantly evaluated as a double-edged sword.

‘In the end, does it mean that we want to have some of our debts forgiven?’

Taken from readwn.com

My stomach was so clear I was embarrassed.

They even took one more drink and tried to dispel the debt obligation of the state altogether.

“If the European Central Bank is established, you will manage the bonds and notes. They mediate each other’s financial transactions while managing the country’s credit rating.”

“Oversee the notes? Are consoles included?”

“Sure. The same goes for bearer bonds.”

In a word, it meant that it would dispose of bearer bonds and consoles at random.

This could have been a decisive event in which Eaststellar’s central bank was eventually caught up in the UK and unable to manage its assets at will.

Also, there was a possibility that Eaststellar would fall into a trash can of debt with him.

‘You see people as water.’

Lee Hwan thought that East Stellar could become a central bank.

But it was just never going to happen.

“Then let me converge some conditions.”

“Conditions?”

“Give me a license to liquidate bad companies and bad debts. And give me the right to revitalize the company and sell the stock back.”

“Would you like to liquidate an insolvent company? It’s not bad for us either.”

There is no banker who rolls more money than Eaststellar, so the establishment will be possible.

One is now at war.

It was impossible to know what kind of risk it would take, and it was impossible to blindly become a trash can for bonds.

If it was going to be a trash can, it would have been better to collect the garbage and get a license to sell it to others.

‘If I become a trash can, I will become a junk bond trader.’