Father of France

Chapter 171 The Concept of Subprime Loans
While the franc is currently facing inflationary pressures, the Thai baht certainly doesn't have this problem, as Thailand itself is experiencing hyperinflation.

Otherwise, civil prime minister Prii Panomrong would not have been later ousted by Luang Phibunsongkhram, who was forced to step down due to his close ties with Japan during World War II.

The Bank of France has been nationalized, which was the biggest achievement of the left-wing coalition government a few months ago. Now transformed into the National Bank of France, it will immediately send people to Bangkok to pull this Indochina Peninsula country, which had almost started from scratch due to the war, out of the abyss and back on track.

The French National Bank will also integrate Thailand's rice-trading-centric financial system, for example, by co-building this system with Bangkok Bank of Thailand.

Will this move raise concerns in the United States? Koeman thinks there's no need to worry; what is the franc compared to the pound?
It was only the early stages of the Bretton Woods system. The pound sterling still had a wide circulation due to pre-war inertia. Although it was no longer the king of currencies, it was still a major separatist power with its own military.

The pound sterling remains widely circulated in the UK, spanning Commonwealth countries across all continents, including Sweden, Denmark, Norway, and Finland in Northern Europe, Portugal and Greece in Southern Europe, Egypt in Africa, and other countries with which the UK maintains important trade relations.

They have in fact formed a huge sterling zone, which still controls the world's raw material and energy supply base and monopolizes a huge global market share.

Although France has a franc zone, the countries where the franc exists are far less developed than those where the pound is sterling; many are still in the era of slash-and-burn agriculture.

Let alone modern countries, many of them are not even feudal, but rather tribal conflicts. How much circulation can the franc bring to such places?
The advantage of these underdeveloped regions is that France can easily destroy the local civilization and establish French culture there. French-speaking countries are more dependent on France than Commonwealth countries are dependent on Britain.

But it was too backward, so backward that it did not help with the circulation of currency.

So, although the area of ​​the Franc Zone may not seem much smaller than that of the Pound Zone, the Franc Zone's share in international trade settlement is only a fraction of that of the Pound Zone.

At its peak, the pound sterling truly accounted for 80% of settlements, making it a genuine international currency.

Even now, the US share of settlements has just surpassed that of the British pound, with the gap between the pound and the dollar being extremely small, the pound only a few percentage points behind the dollar.

These percentage points represent the French franc's share of international trade settlements, primarily in several North African countries and French Indochina.

Even if everything goes smoothly as predicted, Thailand's complete acceptance of the franc wouldn't significantly increase its value; it would still be insufficient compared to the US dollar and British pound.

Until the US cuts the pound sterling and ensures that its settlement share no longer poses a threat to the US, the franc, being such a small fry, hardly attracts the attention of the Americans.

Whether the franc can achieve a more important position in the future ultimately depends on whether it can defeat the mark in Europe. France certainly wants to, otherwise, during De Gaulle's era, the French would not have spearheaded a global run on the US gold reserves.

De Gaulle vowed to dethrone the dollar from its dominant position as the world's currency, overthrow the Bretton Woods dynasty, reform the global monetary system, and ensure that Europe under French leadership would gain greater financial power.

France certainly pinpointed the root cause of that currency war stemming from the fact that gold was the foundation of the dollar, but the national strength of the United States and France was still somewhat distant.

It was still early, and Corman wasn't concerned about the currency war that would happen a decade or so later. He was only doing what he could right now. The people from the National Bank of France would be here soon, since there was a branch of the National Bank of France in Saigon.

Saigon was arguably the most prosperous city in the French colonies, so how could it only have Chinese banks like the Bank of East Asia and the Saigon Bank?

“Actually, once you find common ground with Chinese immigrants, you’ll find things become much easier.” After talking with Thai officials, including but not limited to the Prime Minister, Koman said to Akda with a relaxed expression, “We can even build a financial system with sufficient coverage at a very low cost.”

Of course, Koeman did not deny that the timing was particularly opportune. If they had waited until Chiang Kai-shek made a fool of himself, the United States would have started to take remedial measures and invested resources in the vicinity of the major Eastern power.

So to be clear, Thais still need to endure a few more years of hardship before they can see the light at the end of the tunnel.

As long as the country's difficulties don't escalate to the point of civil war, they don't actually have a significant impact on the upper echelons. People like Chen Bichen of Pangu Bank, Wu Banchao, the timber tycoon, Zheng Wulou of Shangtai Company, and Xie Yichu of Chia Tai Company won't collapse in just a few years.

“They were indeed the suzerain states of East Asia.” French Indochina and the Chinese in Thailand possessed far greater power than the locals; it would be foolish for Akda not to see this. “If they had initiated the Age of Exploration, the world would be unimaginable.” “Don’t think about things that haven’t happened. If they haven’t happened, there must be an underlying reason,” Coman said calmly. The Ming Dynasty had indeed sailed along the Arab sea routes, but ultimately, it can only be said that historical inertia was indeed strong, and the great Eastern power was not destined for that.

Europe has also encountered maritime adversaries before, including the Arabs, an old nemesis.

The Omani Empire in the mid-to-late 19th century was actually a small version of the early Spanish and Portuguese colonial empires, and it also occupied a part of Madagascar.

But the mid-to-late 19th century was the era of colonial empires at 2.0; Spain and Portugal, the two 1.0 versions of kings, had fallen from their pedestals, and it was the era of Britain and France. Madagascar, once part of the Omani Empire, eventually became a French colony as well.

“We should also learn from Britain and reduce our influence in certain regions where powerful countries exist, and deal with problems in a more covert way,” Koeman said in a low voice. He was embarrassed to say that France could not withstand the independence of the three French Indochina countries, but that was the gist of it.

Ekda and Louis Fida will soon find that this investment is well worth it. After all, more than half of 1946 has passed, and once the autumn harvest comes, European countries will find that the harvest is not good and a food crisis will break out immediately. At that time, the rice that was supposed to pull Thailand out of the abyss will be a rare commodity once it reaches Europe.

The British could not hinder France because New Delhi, another of the three major rice trading centers, was already paralyzed, and it was no longer possible for India to suffer further hardship as it had before.

With the help of capital injections from the Bank of France, primarily from Coman and Louis Vuitton, major Thai banks quickly resumed their lending operations.

Upon arriving in Bangkok, the Governor of the Bank of France in Saigon, De Layo, quickly rectified Thailand's financial market, which was centered on the rice business, using swift and decisive measures that were incredibly powerful compared to the Thai banking system.

Koman didn't really understand this kind of financial operation, but when he contacted the other party, he casually inquired whether it was possible to make major Thai banks, including Bangkok Bank, into subsidiaries of the French National Bank.

These Thai banks can borrow money from the French National Bank and then lend it to customers with poor credit at higher interest rates than the banks. This creates a massive lending industry chain throughout Thai society.

“This could easily lead to a crisis.” Delayo looked at Koman in shock. Did the soldier in front of him not know the danger involved?

To be honest, of course I know. This is the process of the US subprime mortgage crisis, but Koman used it on rice.

Koman dared to do this because Thailand is currently starting from scratch, and with the famine in Europe this year that will continue into next year, there is no shortage of market, only a lack of production.

Given the current situation, if France can maintain sufficient food supplies and not feel anxious, it can extract substantial benefits from other European countries.

Moreover, in the food sector, there is almost no problem of not finding a market. It should be noted that even in India in the 21st century, almost all industries are uncompetitive, and food is not hard to sell. This has become the main means for India to balance its trade deficit, but the consequence is that Indians suffer.

Therefore, given the certainty of demand in the European market and the availability of sufficient grain supply, the remaining task is to maximize Thailand's production capacity.

While Thailand's geographical location may not allow for the extreme phenomenon of nine rice harvests in two years like Java, it can still guarantee three harvests a year. There's a high probability this will succeed, and Koman intuitively feels that the risk is much smaller than the subprime mortgage crisis.

"With the rapid economic development starting from scratch, there will be many farmers in Thai society who want to finance rice production through loans, but they lack access to such loans. If major banks lower their credit thresholds for borrowers, they can quickly expand the lending business of the National Bank of France, which only requires the borrower's land as collateral."

Koeman felt there was great potential in the world. He wasn't worried about causing a crisis because Thailand was already mired in a quagmire and didn't care if things got worse. If he succeeded, the boost to French banks would be immeasurable. It has to be said that Koeman's understanding of this matter was extremely cold-blooded.

As a modern-day saint who nominally borrowed over twenty million dollars from a woman of equal status to his wife to help Louis Vuitton and the French National Bank expand their businesses, Coleman's attitude was crucial. Seeing that he couldn't stop him, De Lajo began to make amends, while simultaneously shirking responsibility: "What if there are problems with loan repayments?"

"Then print some more francs!" Koeman thought to himself, but he certainly couldn't say it aloud. Instead, he said in a condescending tone, "If I said I could cover for you, would you believe me?"

(End of this chapter)