Chapter 1030 Great Britain is a big leek (Third update, please subscribe)
“We all know that the pound is very fragile at present. During World War II, the British colonies provided a large amount of exports to the United Kingdom, forming a 47 years of huge sterling reserves. , the United Kingdom announced the implementation of free convertibility of the pound, which triggered a serious pound crisis. Due to the rapid loss of foreign exchange reserves, the United Kingdom was forced to freeze the pound reserves again just one month later.
The pound crisis that broke out in 1949 was particularly serious. Alleviating financial difficulties, English The Chinese government was forced to announce a 30.5% devaluation of the pound, which meant that the price of the pound against the US dollar dropped from US$4.03 to US$2.80. The status of the pound plummeted.
The two successive sterling crises have shown one problem - this. Huge sterling foreign debt burden The burden has been weighing heavily on the British finance. As long as the world economy fluctuates slightly, the pound will have a crisis of confidence.”
Although Li Guoren is not a financial expert, the two pound crises are well known. The fragility of the pound was also fully exposed. This is why the United States chooses to use "currency" as a weapon to suppress the United Kingdom. The essence is that the vulnerability of the pound itself allows the other party to see opportunities.
The fragility of the pound is the root cause of Britain's recession!
Why did Britain decline after the war?
Of course there are different opinions on this, such as the rise of the United States and the Soviet Union, and the independence of the colonies.
All kinds of things.
However, regardless of the specific reasons, Britain's decline originated from World War II!
To a certain extent, Britain fought World War II to defend the interests of the British Empire, but it won the war at the cost of destroying the British Empire. Britain's economic situation after the war was quite dangerous. The huge pound foreign debt owed during World War II has been weighing down the British finances. The domestic economic recovery has been slow, and the growth rate has always lagged behind other major European economies.
As for the United States' strikes and the Soviet Union's last strikes, in essence, they are all based on the same foundation - the weakness of Britain after the war allowed them to see opportunities. If Britain itself is strong enough, it will naturally be able to survive.
But the problem is that the Great Britain now is no longer the Great Britain of yesterday, it is just a broken ship riddled with holes!
It can even be said
On this issue, Li Yian and his cronies have deduced it many times over and over again. After all, for him who is determined to inherit the mantle of the British Empire, Britain's decline is Nanyang's opportunity.
Britain's failure was not because its "strong ships and artillery" were not powerful enough, nor was it because Egypt took the moral high ground because it "opposed colonialism" and became the "just" side in the war; it was because the United States launched a war A "currency war" against Britain finally succeeded in squeezing British power out of the Suez Canal.
After the United Kingdom tasted the backlash of the currency war, it immediately woke up from its centuries-long dream of being a great power and saw its international status clearly. From this point of view, the British are still very realistic and decisive. Unlike Russia in another world, even if it is too weak to be mentioned, it is still there and even claims to be the second in the world. Correct your mentality and position yourself well.
In contrast, the UK is very decisive!
Faced with the reality of recession, one can be so decisive as to directly disintegrate the colonies and become willing followers of the United States. Instead, like the Russians, they constantly jump left and right to find their own way out, wasting national power in vain.
As for the weakness of Britain, Li Guoren, the foreign minister of Nanyang, is naturally very clear. After all, Nanyang has long put Britain under the microscope and knows it very well.
"Although I am not willing to commit, it is well known that the pound is indeed fragile."
McMillan reluctantly took out a cigarette from the cigarette case on the table, lit it, and smoked silently One mouthful.
“During the war, in order to be able to carry on the war, we had to issue a large number of pounds to purchase supplies from the Commonwealth, but after the war, we did not have enough funds to recycle those pounds. This is also The root of the fragility of the pound. This is already the third pound crisis. In the future..."
What will happen in the future?
Macmillan had no answer in his mind. In fact, long before the Suez Canal War, Britain's foreign exchange reserves had almost dropped to US$2 billion, which was considered the minimum safe level. Therefore, for the United Kingdom, the use of force is economically very dangerous. At that time, the UK was still burdened with the huge pound foreign debt it owed during World War II, which was weighing down its finances. The domestic economic recovery was slow, and its growth rate lagged behind other major European economies.
At the same time, the annual income of the Suez Canal is extremely important to the UK. The Suez Canal Company's annual net profit exceeds US$100 million, and the profit share of the British Treasury, which holds 44%, exceeds US$44 million. For the UK, it is in embarrassment. In terms of finance, its importance is naturally self-evident.
However, the sequelae of the use of force are constantly emerging-the closure of the Suez Canal will increase shipping costs and increase the price of imported oil. Markets have deepened doubts about Britain's ability to maintain an exchange rate of 2.8 to the dollar.
If the pound exchange rate falls again, it will have far-reaching consequences. Will those Commonwealth countries and other countries that are accustomed to peg their currencies to the pound continue this habit? They may choose to peg to the dollar because the United States is stronger, both economically and militarily.
If this is the case, it will have disastrous consequences for both the cohesion of the pound area and the banking operations of pound area members in London.
Therefore, despite being very angry about Egypt's behavior, the United Kingdom initially hoped to solve the problem through diplomatic means. In essence, the reason why the United Kingdom was timid was that the pound was too fragile, even fragile. Now, after Li Guoren pointed out this practical problem, Macmillan is also helpless!
"In fact, we all know that the core reason is that the large amount of excess pounds overseas is backlashing the UK. This problem not only exists now, but will also exist in the future, especially with the independence of the colonies. After they become independent, they will definitely issue new currencies. If Its currency is decoupled from the pound, for example, Pakistan is threatening this, and India is also reducing its holdings of pounds after independence. When these pounds enter the market, they will inevitably impact the pound exchange rate. In order to stabilize the exchange rate, the UK can only bail out the market. In the next few decades, this kind of thing will continue to happen again and again, and what can the UK do? It is to continue to rescue the market and continue to spend a lot of wealth to stabilize the financial market. In other words, , even without the country’s abandonment, the pound has become a leek for international financial giants.”
The United Kingdom is a big leek!
The shiny green one!
How could Macmillan, who is the Minister of Finance, not understand? This is also true. The three consecutive pound crises have long made speculators focus on the pound. As long as there is any trouble, they will smell blood. It pounced on him like a smelly crocodile.
"So?"
McMillan turned his attention to Li Guoren. He knew that when the other party mentioned this problem, there must be a solution to the problem. The only problem was that while solving the problem, they wanted to What.
As for the checks of US$1 billion and US$2 billion... they are definitely tied to this condition.
“So, we have to fundamentally solve this problem, well, that is to fix these pounds to a certain extent, at least part of the pounds, in a special way, so as to stabilize the international The market’s confidence in the pound, confidence is more important than anything else.”
While Li Guoren was speaking, Zhao Shijie, who was silent, felt a wave of excitement in his heart, it’s coming, it’s finally coming!
"Fixed?"
Frowning, Macmillan didn't seem to understand what the other party meant, but he still vaguely guessed something in his heart, because there was a country that did this.
“What do you mean?”
Although Macmillan was asking, Li Guoren also understood that the other party should have understood what he was thinking, so he said:
"For now, although all British colonies use currencies issued by the colonies, these currencies are related to It is a matter of course that the pound is pegged to the pound, but with future development, if one day the colony becomes independent and if it changes the type of foreign exchange reserves, such as issuing threats like Pakistan, then there will be a large amount of excess pounds in the market. This is bound to backfire on the UK, isn’t this a mess?”
"So?"
McMillan asked.
“In other words, Britain should follow France in issuing colonial francs, right?”
As early as France ratified the Bretton Woods Agreement and declared parity to the International Monetary Fund for the first time. At the same time, the French government announced the use of the colonial franc in each colony, among which the common currency in the African colonial areas was the "French African Colonial Franc".
The British, as veteran financial players, are naturally familiar with this approach of the French.
"Shouldn't it be?"
As he asked, Li Guoren continued:
"France's implementation of the CFA franc in Africa not only turned the franc into the local reserve currency, but also avoided After all, the CFA franc has been tied to the franc, and by controlling the binding of the two, France has the right to issue currency in African colonies. As long as it controls the right to issue currency, the franc is the local currency anchor. Even after independence, this cannot be changed. Countries will not dare to sell francs easily, which will affect their own economies. "
In fact, Li Guoren does not need to explain all this at all. As a veteran. As a financial power, the British certainly know the benefits of the "CFA franc" and its benefits to the British economy. They can fix the pound as the foreign exchange reserves of these countries, so they don't need to worry about the impact of the massive return of pounds. The pound, which was originally fragile, is naturally no longer fragile.
McMillan is very clear about the benefits, but also clearly aware of the difficulties.
"The establishment of the "African Sterling Area" requires a large amount of funds."
McMillan said helplessly:
"Just after World War II, the United Kingdom had a similar plan, but because For well-known reasons, the Labor Party believed that this plan was an unfair plunder of the colonies and would occupy a large amount of funds, which would inevitably affect Britain's post-war reconstruction... so the plan was aborted."
< br>When it comes to the reason for miscarriage, there is only two words - no money!
(End of this chapter)