LIGHTNOVELONLINE Chapter 1560 - Shocking the World Economy
Chapter 1560: Shocking the World Economy
“The global economy is at a historic turning point. An era that is more open than ever has arrived. We need a currency that can represent all currencies to replace the traditional currency for transactions.”
“World Union Reserve was established for this purpose.”
In front of the media reporter’s cameras, Loki delivered a speech.
World Union Reserve.
Just from the name, it was not difficult to guess the purpose of the organization.
The originally peaceful weekend was suddenly disturbed by this shocking news. In particular, a magnitude three earthquake was set off in the international financial community with the news of the establishment of the World Union Reserve. The attention brought by the news even surpassed the limelight of the completion of the South American space elevator.
Eyes from all over the world focused on the previously calm and peaceful Manhattan Island. The major media in the world also carried out detailed follow-up reports on this matter immediately. It was not yet clear what kind of impact this would have on the global economy, because not many people believed they would succeed at all.
Even if it was a collective endorsement by Wall Street executives, it was impossible.
A unified currency could not be achieved by just an announcement. There were too many political factors involved. Even if the strength of the entire Wall Street was combined, it was impossible to achieve it. Among other things, the Xin Reserve, the leader behind the global economy, did not yet make a statement.
If World Union Reserve had to be established, the proposer should not be First B City Bank, but Future Bank. The qualification of Future Bank was far superior.
However, the development of the matter soon surprised everyone.
On the first Friday when the World Union Reserve announced its establishment, the Xin Reserve announced its cooperation with the World Union Reserve on currency exchange issues…
Hua, Shangjing, in an apartment on Second Ring Road.
It was New Year’s Day, and a rare occasion for the family to eat a meal together.
The news for today played on the TV.
“First B City Bank has established World Union Reserve with more than 20 banks and investment banks, including Chase and Citi, and cooperated with central banks in issuing a unified currency to strengthen free trade.”
“It is reported that the Federal Reserve and the Xin Reserve are the first to announce cooperation. The central banks of more than 20 Pacific Rim countries, including New Zealand, UA, and Canada, will join the World Union Reserve-led Unified Pacific Rim Monetary System. The participating states will pursue a more open system than the WTO free trade system and will use ‘World Dollar’ as the settlement currency.”
“CCTV reporter, reporting for you.”
“The UA just really wants to stir things up, and now they introduced something new,” Wu Jianbin said with a smile while he watched the foreigner speak into the reporter’s microphone.
“I’m afraid the World Union Reserve is not the work of the UA.” Wu Changfeng laughed when he glanced at the TV screen.
“Oh?”
“You see, it is First B City Bank that is leading the initiative for World Union Reserve. Do you know the origin of this bank?”
“I remember it was a UA-Swiss joint venture bank. Both Chase and Citigroup should be more famous than it.” Wu Jianbin frowned.
“First B City Bank is a strategic partner of Future Bank, and the B City Consortium behind it is now the emperor behind Wall Street. You should understand now right?” Wu Changfeng smiled.
“You mean, this World Union Reserve is actually supported by Celestial Trade?” Wu Jianbin’s eyes lit up and he immediately reacted.
“You should ask if you don’t have Celestial Trade’s endorsement, does First B City Bank really dare to do something like this? Even the whole Wall Street probably can’t do it.” After a pause, Wu Changfeng smiled and continued, “Jianbin, you are in the real estate business. I will give you some suggestions.”
“Haha, since when did my brother care about the business? Then I have to listen carefully.” Wu Jianbin smiled and toasted to Wu Changfeng.
“The times are different, you don’t have to keep focusing on the domestic market. Broaden your horizons.”
“Are you saying that the real estate business is dying? It’s impossible.” Wu Jianbin shook his head and smiled, “The total amount of broad money has increased by 80 times in 25 years. The amount of printed money has surpassed the total amount of money supply in the UA and EU, but the total economic output is only less than one-third of it, if it weren’t for our real estate, haha.”
Wu Changfeng smiled but did not respond.
He said everything he need to say. It did not matter if his brother believed it or not.
And now, he didn’t even care about the small business at home.
The benefits of a unified currency were obvious.
Even outsiders in the economic field could easily identify the benefits of a unified currency. A unified currency would reduce transaction costs, reduce the risk of exchange rate fluctuations, promote trade, increase the competitiveness of trade zones, and so on. But in contrast, there were also costs to the unified currency.
The Eurozone could be used as an example. A unified currency caused countries to lose the exchange rate and monetary policy independence, which meant that macro policymakers had to abandon monetary policy and only use fiscal policy to control the macroeconomy. This greatly weakened the response of macro policymakers’ ability to respond to “asymmetric shocks”.
Take Germany and Greece as examples, two countries shared the same currency and shared the same interest rate. However, German industry was more developed than Greece, the labor force was more educated, more productive, and the cost of manufactured goods was lower.
Now that the European Central Bank granted a loan to both countries, Germany used advanced industries and productivity to create wealth far greater than that of Greece through the same capital, so capital and high-quality labor were drawn in. Greece did not generate the same benefits, so it had to maintain its local economy through benefits to encourage spending, which ultimately led to the eurozone debt crisis.
However, it was undeniable that a unified currency would greatly enhance the competitiveness of the trade zone.
If the World Union Reserve created by Wall Street was not enough to make people feel vigilant, then the participation of more than a dozen Pacific Rim countries, including Xin and the UA, was enough to make other trade zones feel real panic.
Panic was the best way to describe the situation.
This trade zone was magnitudes larger compared to the EU, and its trade efficiency and competitiveness were unimaginable in other trade areas.
For this reason, the Kremlin convened two consecutive temporary meetings to discuss the World Union Reserve and its possible impact on the Russian economy. Putin and the Russian Minister of Economic Development, who were on a diplomatic visit to Europe, ended their trip early to attend the meeting.
On the other side, the same thing happened in Shangjing.
On the first weekend of the announcement of the establishment of the World Union Reserve, the Central Bank of Hua held a temporary meeting to discuss the formulation of a new monetary policy to counteract the potential impact of the establishment of the World Union Reserve.
The establishment of the World Union Reserve affected everyone’s nerves, whether they wanted it to or not…