In the morning meeting, the Ministry of Foreign Affairs and the Ministry of Foreign Trade gave the agenda for the day, regarding the issue of a unified currency to be used after the formation of the World Financial and Trade Organization.
The whole morning will be spent solving this problem, and this problem is also a problem that everyone is concerned about.
If the empire had to require each member state to put up a certain amount of gold as a risk reserve for the issuance of a joint currency, some small countries might face some big troubles.
It is very common for the currency exchange rates of small countries to fluctuate in the foreign exchange market. It can be said that this is a very normal phenomenon. There are two reasons for this situation.
First, if the country's currency is issued based on national credit, any economic decision or even a change in a stock may drive the performance of the currency in the foreign exchange market.
The country is small, the system is not perfect, and the economic structure is single. Once a company that occupies a dominant position in the economic field has some operational problems, it may be just an operational failure, such as failure to complete the expected profit plan, which can pull up the entire country. Huge fluctuations occur in the economy, which in turn affects the currency's performance in the foreign exchange market.
Moreover, the credit currency system often appears in large countries, and it is difficult to see it in small countries. If you have to ask why, it can only be said that small countries have suffered too much interference in national credit and international issues, and they do not have the ability to resist risks. Therefore, it is not appropriate for smaller countries to adopt a credit system.
Even the slightest diplomatic developments in neighboring countries may cause the public and even the entire world's capital market to re-evaluate the beliefs of this small country. Even some diplomatic issues that are not targeted at this small country may also cause a chain reaction.
The constantly fluctuating exchange rate is definitely not a good thing for a country's financial economy. It is easy for disputes and problems to arise in international settlements. Therefore, small countries tend to prefer precious metals, such as gold, as risk reserves according to certain regulations. The issuance of currency is carried out proportionally.
In the second case, the issuance of currency is based on precious metal reserves. Strict and accurate figures are used to stipulate how much currency can be exchanged for one ounce of precious metal. The exchange rate of the currency is determined indirectly. This seems to be very easy to do. matter.
Currency itself does not have any value. It is just a special commodity used for small-scale circulation, but it becomes different when it is related to gold.
Precious metals like gold are popular hard currencies around the world, so nailing the price of gold for exchange rate comparisons can reduce the violent fluctuations in currencies caused by financial problems.
However, this is not necessarily the case. For example, if a large country suddenly starts selling gold for some reason, this will cause the price of gold to fall rapidly.
Another example is that a gold mine with huge reserves is discovered somewhere, even if the mine is located abroad. The world gold price plummets, and even small countries with a very good development momentum also suffer from a sharp drop in currency exchange rates due to the plummeting gold price, causing serious losses in foreign trade.
However, this situation is obviously much better than the first one. It is not every day that gold mines with huge reserves that can affect the world are discovered in this world.
Even if it is discovered, it may not be mined. Before the gold buried underground is turned into golden bricks and sent to the bank, its role will not be immediately reflected in the financial market.
But if the Yaoxing Empire needs everyone to use a proportion of their gold reserves this time, it will really be a disaster for these small countries.
It was obviously a good thing, but it turned out to be a bad thing. The reduction of gold reserves means that the potential value of the currency is reduced, which will affect export trade.
This is like having one hundred grams of gold at home and issuing one hundred yuan as a risk reserve. Now someone has taken away fifty grams of gold. This also means that only half of the gold used to combat risks is left. Then the actual value of the one hundred yuan that has been issued will only be half.
One dollar can only be equal to fifty cents of what it used to be. There is no doubt that this will have a huge impact on the entire country's economy. The money in people's pockets is suddenly worthless. Civil strife or even civil war may break out in some places.
Most of the morning meeting was spent discussing whether it was necessary to issue a joint currency and what changes it would bring to member countries after the issuance of a joint currency.
Don't look at the fact that these participants are either national leaders or high-level representatives of the country. At such a critical moment, each one of them refused to agree with others' heads.
In fact, there are some countries in these countries that support the issuance of a joint currency. Of course, these people have their own plans.
The prince of the Colt Empire agreed to issue a joint currency in order to solve the problems of the domestic financial structure.
They are in the transition period between feudal and modern society. The Great Pharaoh wants to promote the Colt Empire to quickly complete the system transformation and keep up with the pace of the international power Shining Star Empire while ensuring that the power in his hands is not threatened.
But this is definitely not something that can be explained clearly in one or two sentences. In the Colt Empire, people in many areas still use gold coins as an important currency for circulation, and they are not interested in the paper currency issued by the royal family.
This resulted in paper currency being considered a failure from the initial stage of issuance. This was very bad and inconvenient for the royal family to control the domestic financial order. As a result, in a rather feudal country, the status of merchants was about to surpass that of the nobility. , this is simply an international joke.
If the establishment and issuance of a joint currency can be promoted, merchants in the Colt empire must use the joint currency for international trade settlement according to IFTO and international settlement methods.
Then the question arises, how to obtain the joint currency
Of course, you have to use paper currency to obtain it, so how to obtain paper currency? It’s very simple, use gold coins to exchange!
This can quickly gather a large amount of gold from the private sector, and at the same time, the currency issuance rights controlled by the royal family can give the royal family more say in the financial field, which is of great help to the Colt royal family in stabilizing their power position.
Most of the other countries that support joint currency issuance have their own ideas and consider them from the standpoint of their own interests.
As for those who do not advocate the issuance of a joint currency, they are basically small countries that are not equipped to withstand the risks of international financial trade. Some people even believe that the issuance of a joint currency is most likely a conspiracy of the empire.
Once their domestic gold reserves are insufficient, their domestic currencies are likely to be gradually eliminated by the joint currency. In the end, the joint currency will not only be the international settlement currency, but also the main currency in circulation in their country.
If the Yaoxing Empire plots any more terrifying conspiracy, it can completely destroy their financial order, destroy their economic construction, and plunder their country's wealth.
After arguing all morning, no result came out. Finally, when it was about to take a lunch break, the Imperial Foreign Minister made a suggestion.
"Since everyone's opinions cannot be completely unified at present, we can propose another relatively moderate method, using the Imperial Star Dollar as the international settlement currency. Everyone can discuss it during the lunch break. We will continue to discuss this issue in the afternoon..."
(End of chapter)