The expeditionary force began to dominate Southeast Asia by recruiting defeated soldiers

Chapter 471 Oil, a rubber-backed currency?

Seeing Zhang Chi's resolute and clear-headed attitude, Chen Zhenchuan's eyes flashed with admiration.

But he knew that political strongmen like the one in Shancheng and the Iron Man in Damao were more stubborn and difficult to serve than each other.

The impression Zhang Chi gave him was that he was easy-going, receptive, knew a little about everything, and was willing to listen and communicate.

Who wouldn’t like a leader like this, and who wouldn’t want to work for him?

As the central bank governor, he was well prepared for the issue of relaxation and took out a more detailed plan from his briefcase:

"The most urgent task is to unify the chaotic currency market in Southeast Asia with a new currency. The Japanese-issued 'Southern Development Notes', the Siamese baht, the Malayan dollar and Pegu dollar left behind by the colonists, various local miscellaneous notes, and even barter currency are still in circulation.

To exchange and collect these, we must issue a sufficient amount of new currency in the first phase. I estimate that the initial issuance will require at least $5 million worth of Nanyang dollars.”

"As for the anchor," Chen Zhenchuan ran his finger over the plan. "We can't rely entirely on gold, but we can't do without hard currency either. My suggestion is to adopt a composite anchor and establish a 55% comprehensive reserve ratio.

Of this, 10% is gold, equivalent to approximately $2500 million, or 22 tons. This is the ballast of our credit and must be kept in the vault to be used when necessary to stabilize exchange rates or for critical international settlements. We already have this.

25% of foreign exchange, equivalent to approximately $1.25 million in banknotes, primarily in dollars and pounds, is used for daily international trade settlements and to maintain liquidity. In fact, our current foreign exchange holdings far exceed this target.

In addition, we have 20% strategic physical reserves, which are worth approximately $1 million. This is our characteristic and advantage.

As long as the People's Army can control most of the oil, natural rubber, tin mines, and even part of the grain reserves in Southeast Asia, these are real hard currencies that are always in short supply in the international market.

Then we can promise that the value of the Nanyang dollar will be partially anchored to the value of these strategic materials. As long as you hold the Nanyang dollar, you can purchase unlimited quantities of these materials from our strategic reserves.

This is more convincing than empty promises, especially in wartime. To be honest, these materials are now as valuable as gold."

Zhang Chi's eyes lit up: "Petroleum rubber endorsement? That's a good idea!"

Thinking of the future oil industry, his whole body began to tremble with excitement. The scene was too beautiful to imagine. He dared not even think about it.

Chen Zhenchuan continued: "As for the remaining 45%, it depends on the country's credit and future tax revenue expectations.

And most importantly, as you emphasized, General, we have a strong ability to maintain a surplus in foreign trade.

We export oil, rubber, tin, tungsten ore, industrial products, and pharmaceuticals in exchange for foreign exchange and gold, and continuously replenish our reserve pool. This is the fundamental way to ensure long-term currency stability."

"As for the new system being formulated at Bretton Woods," Chen Zhenchuan pushed up his glasses, his eyes flashing with foresight behind the lenses. "In my opinion, no matter what the final plan is, John and Gaul, the two old colonial empires, will be the biggest hidden dangers within the system."

"Oh? Why do you think so?" Zhang Chi asked with interest. He was very curious about the judgment of this local financier.

"They printed too much money to win the war. The treasury's gold reserves have long been depleted," Chen Zhenchuan said firmly. "Once the war is over, the huge fiscal deficit and over-issuance of currency will inevitably lead to severe inflation and a credit crisis. It's impossible for them to maintain the strict gold standard as they did before the war."

"Then what should they do?" Zhang Chi asked. He already had the answer in his mind, but he wanted to hear Chen Zhenchuan's analysis.

"What should we do?" Chen Zhenchuan let out a cold sneer that showed his insight into the world. "John is still relatively safe. After all, he still has the huge Sindhu colony to 'suck blood' from. By intensifying the exploitation of the colony's resources, he can temporarily recover and delay the crisis.

But the Gauls..." He shook his head, "They were defeated in their homeland in Europe, and the industrial zone of Alsace-Lorraine was also destroyed. Their only way out is to intensify the exploitation of overseas colonies. Especially in North Africa and..."

"The Three Kingdoms of Annan!" Zhang Chi blurted out with a hint of amazement in his tone.

"That's right," Chen Zhenchuan affirmed. "After losing the ability to freely exchange gold, the Gauls will inevitably exploit colonies like Annan, impose heavy taxes, and plunder resources to fill the gaps in their homeland in order to maintain their stability.

Trying to prove to the market that "hair still has value" and "holding hair can still buy goods." This is the essence of credit currency, the confidence that holding it can buy goods.

But this is undoubtedly drinking poison to quench thirst. The high-pressure rule in Annan will only arouse stronger resistance, and ultimately lead to a sharp increase in the cost of colonial rule and even out of control.

If the colony succeeds in its rebellion or falls into a quagmire, the hair man’s credit… hum.” He snorted meaningfully.

Zhang Chi was deeply shocked.

Chen Zhenchuan's accurate predictions based on financial logic and geopolitics are almost completely consistent with the historical trends he knows.

The subsequent Hairdressing Crisis, the North African independence movement, and Gaul's entanglement in the Annamite Wars...

He remembered that when General Dai finally came to power again, he had to implement the new hairard, with 1 new hairard = 100 old hairards to rebuild the currency credit.

This future history seemed to unfold slowly in Chen Zhenchuan's calm analysis.

This future central bank governor has a terrifyingly sharp vision!

"President Chen is truly a national talent," Zhang Chi praised sincerely. "Your analysis is penetrating and insightful. I feel assured that you are in control of the overall financial situation."

Chen Zhenchuan quickly waved his hand modestly:

"You're overly kind. I've been in the financial industry for many years and have seen its ups and downs. This is just some experience. The key lies in your determination and the execution of our future policies."

At this moment, the "buzzing" sound of the electric fan seemed to be drowned out by the "click" sound of the wheels rolling over a larger bend, and the car shook slightly.

Zhang Chi sat as steady as a mountain, while Chen Zhenchuan subconsciously adjusted his teacup.

"By the way, President Chen," Zhang Chi suddenly remembered an important question and said half-jokingly, half-seriously, "You just said that the first issue will be 5 million Nanyang dollars...the largest denomination of these new banknotes is only 100. What would be a good initial exchange rate with the White Eagle Dollar?"

Zhang Chi was a little afraid that the exchange rate of his own Nanyang dollar would depreciate rapidly. If that happened, he might have to follow the example of the one in the north and print out denominations of millions or tens of millions to fool people. That would be a real joke.

Chen Zhen heard the rumors and couldn't help laughing:

"Don't worry. The largest denomination we've designed is 100 Nanyang dollars. We have a full range of smaller coins. Considering the current exchange rate of 1 dollar = 4 gold pounds, and considering the hard currencies we have, such as oil, munitions, food, and rubber, it would be better to set the price at 1 dollar = 5 Nanyang dollars.

Appropriate devaluation will not only provide export advantages but also will not overly endanger people's livelihood.

However, in order to gain recognition of our new currency by the United States, we may need to transport some of our gold reserves to the vaults of the White Eagle Central Bank."

Chen Zhenchuan observed Zhang Chi's expression and said cautiously, "It doesn't need to be too much, about 10 tons will be enough."

Zhang Chi waved his hand, signaling Chen Zhenchuan to relax:

"I understand. It's as it should be. After all, we signed the Bretton Woods Agreement. The Republic of China got a $5.5 million quota from the newly established International Monetary Fund (IMF) without any real effort."

(As an initial member country, the Republic of China's quota is second only to White Eagle, John, and Big Mao, and higher than Gaul)

If we transfer 10 tons of gold, we should at least get a quota of 4 to 5 million back, right?"