"I know that Your Majesty is worried, but the appearance of Yanhuang Bank and Tang Yuan will definitely bring more benefits than harm to Tang. Your Majesty, please consider this carefully!"
Li Zexuan bowed and said in the Sweet Dew Hall.
The bank and Tang Yuan, which had been around for more than half a month, were finally going to face the super 'test' that they had to go through!
If they passed, they would live. If they failed, they would die!
Li Er asked calmly, "Oh? Then tell me, what benefits can this bank and Tang Yuan bring to Tang? "
Li Zexuan organized the words in his mind and slowly said,
"Your Majesty, first of all, Tang Yuan is lighter than copper coins. It is more convenient for merchants and commoners to trade, especially for large transactions! For example, buying a horse carriage. Nowadays, horse carriages are mostly priced at a few hundred strings of coins. A few hundred strings of coins would weigh at least a thousand catties. It would take at least two to three ox-carts! If we use Tang Yuan to pay, we only need a few hundred Tang Yuan notes to easily complete the transaction. Regardless of whether it is the buyer or the seller, it saves a lot of time! "
As he spoke, Li Zexuan took out a 100 Tang Yuan banknote. Li Er had Zhao Song present the banknote to him, and after examining it carefully, he said,
"Just as Xuan Ling said, your Tang Yuan is very exquisite! We already have some understanding of what you just said, but we can't abandon copper coins and use Tang Yuan just because it's more convenient than copper coins! If it causes unrest in the country, you will not be able to bear the responsibility, and neither can I! "
Li Zexuan cupped his hands and said, "Your Majesty is right! This Tang Yuan can indeed cause unrest in the country. It is definitely right to be cautious! "
Li Er frowned and said unhappily, "You were just saying how good Tang Yuan is. Why are you saying this now?"
"Your Majesty, the reason why Tang Yuan can cause unrest in the country is because it is too easy to use and has too many advantages! If you want to talk about Tang Yuan's disadvantages, you have to start from its advantages! "
Li Zexuan smiled and continued, "Apart from what I said just now, the second advantage of Tang Yuan is that it is extremely safe to carry around and can make up for the lack of money! Our Tang Empire currently produces about three million catties of copper annually. Even if we use all of it to make copper coins, we can only make about six hundred thousand strings of coins!
Ever since His Majesty ascended the throne, he had cooperated with the civil and military officials to vigorously develop the people's livelihood. The 600,000 strings of coins per year might have been enough a few years ago, but since last year, the people's copper coins had been stretched to the limit. And as time went on, with the development of production in the provinces and counties of the Tang Empire and the acceleration of the circulation of goods, the speed of copper coins casting would gradually fall behind the people's needs for copper coins!
When that time comes, there will be a shortage of money Coins, how will the imperial court deal with it? Must we restrict the production? Of course not, it will hinder the Tang! If there is a bank and Tang Yuan, and the imperial court enforces a rule that Tang Yuan can completely replace the copper coins, then there will be no shortage of money! "
Li Zexuan's words had indeed poked at a sore spot in his heart. He knew his own situation. The Tang Empire's annual coinage was actually less than the six hundred thousand strings of coins mentioned by Li Zexuan. Furthermore, it was undeniable that ever since the world was at peace, the people's agricultural production had recovered very quickly. The speed at which the Tang Empire's copper coins were increasing could not keep up with the people's demand for copper coins. If this continued, the imperial court would really have no way to deal with it!
When that time came, could the imperial court suppress the value of all commodities? For example, if a bushel of rice was suppressed to two copper coins, the people's demand for copper coins would naturally decrease. But how could that be possible? At this time, commodities were already very, very cheap. They could not be suppressed any further!
"You mean that after Tang Yuan replaces the copper coins, We can use Tang Yuan to alleviate the shortage of money?"
Li Er frowned and asked.
There was indeed a problem with the Tang Empire's current currency system, but he always felt that Tang Yuan would have hidden dangers and would not be 'reliable' when using it!
Li Zexuan quickly shook his head and said, "Your Majesty, this is one of the disadvantages of Tang Yuan, and also where the hidden danger lies! Tang Yuan can solve the shortage of money and can quickly generate a large amount of wealth for the imperial court, but there is a huge risk behind it! Your Majesty is wise and has outstanding self-control, but can you guarantee that the future emperors will be like you?
What if there are emperors in the future who are greedy for temporary profits and use Tang Yuan to deal with the imperial court's financial difficulties, causing the Tang Yuan flowing to the people to be much higher than what the people need? The people will feel that Tang Yuan is worthless and will frantically try to exchange Tang Yuan for copper coins. At that time, the new currency system established using Tang Yuan will quickly collapse. Furthermore, if it is not handled properly, the country will also collapse. "
Li Er was suddenly enlightened and finally understood what the problem in his heart was. He asked, "Then what is the basis for the distribution of Tang Yuan?"
Li Zexuan replied, "Currently, it is based on the amount of copper coins prepared by the bank! During the initial stages of the distribution of Tang Yuan, the bank must provide a hundred percent or at least eighty percent of the reserves for the Tang Yuan! In other words, if the bank wants to issue a hundred thousand Tang Yuan, it must have a reserve of at least eighty thousand strings of cash for the commoners and merchants to exchange for!
To put it bluntly, Tang Yuan is just a proof of trust. Only when everyone believes that Tang Yuan can be exchanged for copper coins will they feel at ease using Tang Yuan! Furthermore, as the commoners and merchants' trust in Tang Yuan increases, the number of times they exchange for copper coins will obviously decrease. At that time, the reserve that the bank needs to provide can be reduced to forty to sixty percent! At that time, although the Tang Empire can only produce six hundred thousand strings of cash every year, it can issue at least a million Tang Yuan! "
Li Er's eyes lit up. He finally smiled and said, "That's not a bad idea. But from what we heard, in the future, won't the Tang Yuan issue be based on the amount of copper coins prepared by the bank?"
Li Zexuan replied, "Of course not! This method of using copper coins as a guarantee to issue Tang Yuan is just the most basic method of the bank! When Tang Yuan is accepted by the majority, there will be no need to use copper coins as a guarantee. At that time, it will be using the reputation of the imperial court as a guarantee. The amount of Tang Yuan issued will be based on the value created by everyone in the Tang Empire every year! Thus, the bank must be in the hands of the imperial court! "
In modern society, there are three basic stages of currency issuance:
First, gold and silver reserve system: Under the metal currency system, it was stipulated that the bank notes issued by the central bank must have a hundred percent reserve, because the bank notes could be exchanged for gold and silver freely.
Second, guarantee reserve system: After the non-cash credit currency system replaced the metal currency system, the central bank's currency issuance was guaranteed by securities, foreign exchange, and even other assets. (This was also one of the reasons why the country placed great importance on foreign exchange reserves)
Third, managed currency system: To prevent the central bank from issuing excessive banknotes, many countries used to issue a maximum amount of banknotes.
In Li Zexuan's plan, Tang Yuan had to develop from the initial exchange currency to the credit currency system, and finally develop into an official currency issued by the country, completely replacing copper coins!
After all, from his point of view, other than being used to make money, copper was still very useful in other aspects!
.....
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