Emperor Black Dragon's thought process was not difficult to understand. The people of Airadia were not stupid. It was not that there were no similar scams and schemes in history, but if ordinary people were to use this method, they would be exposed and bankrupt in the end. However, for the Blackwing Empire, as long as it was done properly, such a possibility would not exist in a short period of time.
Profit and trust were the key. Profit made the borrower willing to hand over the gold coins to the court, and with the trust of the Empire, the borrower would never have to worry about not being able to withdraw the money when they wanted to. After the Northlanders became accustomed to the court's bank, unless they really needed money, no one would withdraw money just out of worry.
In fact, Caesar had thought of this plan a long time ago, but due to the timing, he had not used it. However, as the Blackwing Empire's rule became more stable, the Northlanders' sense of belonging to the Empire increased day by day, and it was time for a similar financial model to appear on the stage.
Caesar did not study economics in his previous life. To be more precise, he should have known nothing about it. However, due to the information collected from the information explosion world, the Black Dragon did know some things that the people of Airadia could not see and did not understand, and these things were often of great use.
The bank must be built because it was only the first step. When this model was gradually accepted by the people and the strength of the Empire increased again, the court would definitely issue currency to replace the flow of precious metals for transactions.
Hmm, I'm thinking a little too far … Borrowing from the people did not sound good, so Caesar came up with a new name for this model: Blackwing Bonds.
"The new name is just the beginning. If you want it to take effect, then you have to at least establish a formal and complete system, so that it not only looks like it, but also can actually operate."
Ryan didn't leave. Instead, he summoned more assistants to listen to the Black Dragon Emperor's teachings. "There are many rules and regulations that need to bind everyone, including us."
Caesar sat cross-legged on the throne. Beside him, Black Shirt lowered his head and focused on writing notes, ensuring that he did not miss any of Emperor Black Dragon's words for later reading and thinking.
"Now, I'll tell you some of the necessary details. Take note, this is not all.
After you leave, you have to think and supplement on your own. After a week, report back to the palace and finalize the final detailed regulations. "
Caesar said, "A mature economic system must consider many things: stability, order, development … But right now, the Empire's matters have only just begun, so you only need to consider stability and order for the time being. The so-called stability refers to the stability of the capital, and right now, the Empire's only source of income is the Blackwing bonds, so we must ensure that the people do not casually ask for repayment."
"You mentioned it before. Profit," Ryan replied.
"If we want to ensure financial stability, we can't just rely on profits."
Caesar said, "It's true that the people can make a profit by buying bonds, but they're skeptical of something that's too easy to obtain. Just now, we changed the name of this loan. Now, you have to tell the people that the Blackwing Bonds are recognized and protected by the court's laws. The Imperial Bank refuses to redeem the gold coins before the agreed time."
"But if that's the case, I'm afraid the people won't be willing to lend … oh, buy Blackwing bonds," Ryan reminded.
"There's no need to be so strict, Ryan."
Black Dragon shook his head, "If the people who have already bought the bonds repeatedly ask to exchange the gold coins, the bank can let them redeem the bonds ahead of time, but the punishment is inevitable. The bank can deduct the money through various excuses such as handling fees, liquidated damages, and so on. But remember, these deductions can't involve the principal."
"For example … The Imperial Bank refuses to sell the bonds to this person?" One of Ryan's young assistants interjected.
"Not bad."
Black Dragon nodded approvingly at the young man in black, "In more formal terms, this is called disqualifying the person from buying Blackwing bonds again."
"After the restrictions are laid out, the next step is to increase the stickiness of the Blackwing Bonds. When the time comes, the Imperial Bank must tell the people that the profit from buying bonds will increase year by year.
For example, the first year after the purchase, the profit will be one percent, the second year's profit will rise to two percent, the third year's profit will rise to three percent, and so on until the profit rises to five percent. "
"The reason for doing this is to let the bond buyers have the impression that the longer they buy the bonds, the higher the return.
For example, if you have 100 gold coins and bury it at home for a year, it will still be 100 gold coins, but after a year of buying Blackwing bonds, it will become 101 gold coins. What do you think the people will choose? "
"There's no need to choose."
His Majesty's praise gave the young man in black confidence. His voice grew a little louder, "Not only that, as long as the Empire's authority is guaranteed, the people will gradually develop the habit of using their money to buy Blackwing bonds instead of burying them. And unless they urgently need money, they will do their best not to redeem the bonds."
"That's right."
Caesar let out a low laugh, "Now, I'll give you a question to think about. Suppose you are a merchant who has bought 10,000 gold coins worth of Imperial bonds for eleven months. The agreed time limit for redemption hasn't arrived yet, but because of the lack of funds, you are in urgent need of gold coins.
If you redeem the bonds immediately, you can only get 10,000 gold coins. But if you wait for another month, you can get an extra 100 gold coins. What would you do? "
"Of course I would continue to wait. 100 gold coins is the reward I earn for serving the Empire for a year. How could I not wait?"
"Idiot, didn't you hear what His Majesty said?
There is no time to wait. The merchant is in urgent need of gold coins. "
"Then there is no choice. We can only redeem the bonds."
… …
The black-robed men discussed animatedly.
"Your Majesty."
After waiting for a while, the youngest black-robed man suddenly stood up and said, "In a situation where I can't disobey the Imperial Bank, the best way I can think of is to sell the bonds to another merchant at the price of 10,090 gold coins. This way, not only will I get my gold coins and profits, but the merchant will also earn 10 gold coins after a month."
"What is your name?" The Black Dragon lowered his head slightly and looked at the tiny human with his vertical eye.
The young black-robed man hurriedly knelt down and said in a trembling voice, "Danby. My name is Danby Sherlock, the great Emperor."
"You are not bad. I will remember your name."
Caesar nodded his head in satisfaction. Meanwhile, the other black-robed men all said, "Damn it, why didn't I think of that?"
Indeed, Dampier's choice was the best, but perhaps he himself did not understand that in this process, the Blackwing bond itself had replaced the value of 10,000 gold coins. In other words, it had the function of a currency in a certain sense.
Once people became accustomed to this, the Imperial Bank would begin to issue paper money. The Blackwing Court would also become the first country in Airadia to use paper money.