King-Chapter 1416 - 269, Reform_2

"There are so many commercial banks in the country. Just mortgage the goods to them and raise some cash for an emergency!"

Marquis Alfred, Minister of Government Affairs, said angrily.

The words "we’re broke" shattered all plans of the Government Affairs Department. Under the current circumstances, this month’s salaries for officials were almost certainly out of reach.

Although salary delays were routine for the Kingdom, this perpetual chaos made Alfred, as the Minister of Government Affairs, lose face considerably.

"Marquis Alfred, due to issues like transportation and storage difficulties, there are still many uncertainties in bringing back food and other strategic commodities.

Banks operate for profit; no one engages in loss-making deals. They simply refuse to accept risky commodities as collateral.

Even if we liquidate these goods at discounted prices, only a handful of banks have the capacity to take them on, and the offered prices would be merely 20-30% of the domestic market value.

Among them, the only bank that is genuinely well-capitalized is the Near East Development Bank.

In fact, the Near East Development Bank already has a substantial stockpile of grain and textiles. Apart from the Kingdom’s Nobles, the Nobles from the Five Nations Alliance have also been offloading these materials to them."

Count Francis calmly explained.

When selling war loot, capital from all quarters converged madly, yet few buyers could actually afford to pay.

Faced with heaps of war loot, whether banks or merchant associations, all were facing severe cash flow shortages.

The Near East Development Bank dared to buy in bulk because, besides having a large enough scale and having previously established market credibility, they also absorbed significant new deposits from the Papal State. But the most critical factor—was the Gold Ticket.

For Noble Lords carrying large amounts of cash, it was inherently risky; missteps could result in being robbed or swindled.

The best option was Gold Ticket transactions. To be even more cautious, they might demand a mandate for real-name transactions, where only the owner or designated beneficiary could withdraw funds.

In the fiercely competitive financial market favored by strong players, the Near East Development Bank, with its early-mover advantage, became the biggest winner.

Not only Nobles from the Northern Continent became their clients, but Nobles from the Central and South Continents also flocked to the bank.

The decline of the Clergy dragged the Holy Business Association into bankruptcy. Among the capital now active in the Papal State, only the three major merchant associations and the Near East Development Bank possessed substantial strength.

Oddly, due to its industry attributes, the least comprehensively powerful Near East Development Bank controlled the largest cash flow.

Low-margin commodities primarily fell into the coffers of the Near East Development Bank. Even if they were devalued and only collectible via Gold Tickets, there was simply no other competent buyer.

Noble Lords didn’t care. After all, the loot was stolen; no matter the selling price, it was pure profit. Cashing in quickly for the next raid was their priority.

The Kingdom Government, however, was different. They were broke! The hard-won war loot couldn’t be sold at a deep discount so easily.

All eyes turned to Caesar IV. Within the Kingdom, besides the Near East Development Bank, the most powerful financial forces were the Royal Bank and the Royal Chamber of Commerce.

At such a critical juncture, the Royal Family needed to lead the way for others to persuade Hudson and other Major Nobles within the country.

"The Minister of Finance is right. Currently, liquidating strategic commodities is indeed quite problematic. All we can do now is transport the goods back as quickly as possible.

Just because they’re cheap in the Papal State doesn’t mean they won’t hold value in the Kingdom. Even if they’re set aside for strategic reserves, they’ll save us significant future fiscal expenditures.

With this grain supply, half of the challenges involved in building a new defense line will be resolved. freewёbn૦νeɭ.com

Later, we’ll dispatch the army to capture some slaves from the Orc Empire, which will solve the trickiest issue."

...

He spoke at length, yet avoided mentioning the Royal Family’s contribution. It wasn’t that Caesar IV lacked the big-picture perspective; reality had simply taught him the harsh economics of running a household.

Years of continuous warfare had impoverished the entire Kingdom. How could the Royal Family have immense wealth under such conditions?

Though outwardly impressive, internally, they too suffered significant financial woes. If they had any other choice, they wouldn’t have ventured into banking themselves.

With the Royal Family’s reputation, they indeed held a competitive edge; however, the most prized clientele had already been snatched up early by the Near East Development Bank.

In a society built on relationships, business wasn’t just about profit; it demanded rapport too. People wouldn’t easily switch partners under normal circumstances.

Moreover, late-comer platforms offered far fewer services, making them inherently less competitive.

Combined with a lack of financial expertise, incomplete systems, and muddled management still in its trial-and-error phase, frequent mishaps ensued.

Aside from its prominent name, the Royal Bank had absorbed few deposits and had an alarmingly high rate of bad debts.

Having finally encountered an opportunity to make big money, if forced to accept the government’s strategic commodities for the sake of the larger picture, Caesar IV feared the Royal Family’s industry might meet its demise.

As for the Royal Chamber of Commerce, it was intrinsically tied to the Royal Bank, with half of the bank’s business coming from the chamber itself.

If one collapsed, the other would inevitably follow suit. Currently, the Royal Bank’s biggest looming risk was government debt.

Even having collateral was useless; panic-induced withdrawal scares would trigger a liquidity crisis that the Royal Bank couldn’t withstand.

In truth, the Royal Family wasn’t alone in this predicament. The Major Nobles who followed suit by establishing banks similarly fell victim.

Not only did they earn little from banking, but they were also ensnared by the Kingdom Government’s debts. Apart from the more than four million in direct loans, they also underwrote a huge amount of government bonds.

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