Chapter 870 – Plans for currency transition

Chapter 870 – Plans for currency transition

The planning of the currency took about two hours, during which the majority of the girls decided to go home and get some more interesting stuff done. Only Lydia and Scarlett stuck through all of the planning process. The former agreed to be an early adopter of the currency as a simple point of realism. Lydia knew that something monetary being pushed by the Abyss Auction was inevitable. Scarlett stuck around because she didn’t want John to screw this up.

The currency would take three shapes. As the rarest one, there would be coins minted from various metals. Copper, iron and gold coins would be the most basic ones in circulation. Above that were magical metals that were roughly equivalent in value. Those would also come in the shape of a coin and be minted with the same appearance to counteract the colour confusion, stemming from being made from different elemental metals and alloys.

More regular in circulation would be the paper notes. They could be exchanged at Fusion outposts for an amount of metal equivalent to their value and that promise was going to be printed on every single of those notes. The paper currency was a contract between the person holding the note and the government, essentially.

Thirdly, there was the number. Because this was the modern age, people preferred to pay via electronic (or even magical) means. It trumped both paper and coins in convenience by a mile. There was quite a bit of delicacy attached to this process, courtesy of the question of fractional reserve banking.

There were two fundamental jobs banks had, even inside Fusion. One was to hold money. The other was to lend money. The two were essentially linked. Banks, at least at the core of their design, did not have money themselves. They had the money of people storing theirs. Since sitting money was bad for the economy, someone at some point had the brilliant idea to lend it out at interest. Part of the interest trickled down to the people who saved their money at the bank, part of it was used to maintain the bank structure and the loan was used to keep businesses with a steady offer of cash to expand or be founded with.

Of course, that practice had a couple of weaknesses, the most obvious one being when everyone suddenly decided to pull their money out of the bank. Because the bank had lent out part of the money, they couldn’t give it to the people that actually owned it. At that point, trust was broken, the bank would collapse and a bunch of savers would suddenly see their entire finances vanish – through no fault of their own. Because the reward for keeping that money in motion was so large, basically every country in the world was happy to take the risk of the occasional collapse.

From there, someone had an even brighter idea. If the recession and depression were virtually guaranteed to happen at some point, why not maximize the reward in between? Allowing banks to loan out even more money would certainly do so? How could banks give out even more money? Obviously, they couldn’t be allowed to just make more money up, that was the government’s privilege. There had to be at least some base guarantee. A guarantee that could then be multiplied.

That logic lay at the root of fractional reserve banking. A bank was obligated by the state to keep to a reserve requirement. In the case of a reserve requirement of 10%, if a bank held 10$, they could lend out 100$. There were numerous more checks and balances involving central banks and legislation that came to make sure that idea didn’t get too out of hand (as long as everyone actually did what they were supposed to).

All of this was an enormous simplification of what was often a massive spider web of transaction and reserves. Currently, Fusion’s policy was to keep things very simple and easily controllable. There was a central bank in the Hudson Barrier and state banks. Private banks could open up wherever and could lend at whatever margins they wanted. However, they could only lend the money of people who had contractually agreed for their money to be lent out. Those who only wanted the bank to hold their money had to pay a sort of subscription fee for the numerous transaction services. Paying money to a bank sounded a bit unorthodox to John, but those people had their savings guaranteed so it made sense. Banks were still a business themselves.

Those who agreed for their money to be lent had the advantage of free services and part of interest flowing into their own funds. The typical bank experience. However, if the bank ever collapsed or quit, their assets would all vanish along with it. It was the agreed-on risk.

John was happy with the current model, consenting economics were pretty important to him, but that wasn’t to say he may not want to change things in the future. Every stance towards banks and what they were allowed to do carried with it numerous drawbacks and advantages. At the moment, he was going for stable growth, but maybe there would be a time in Fusion’s future where flooding the market with capital was necessary. Scarlett was constantly nagging he should let these things go freely anyway.

Luckily, Dramar also wanted his paper money to mean something and the rest of the world had no permanently sustainable means of guaranteeing it. That was beside the point that people that weren’t part Fusion might ‘water down’ the alloy composition to fake the value of coins. They came to an agreement that the Fusion currency would continuously be displayed as preferred and that Fusion should strike mintage deals with other guilds.

If Rex Germaniae wanted to make its own batch of coins, they were more than welcome to. Fusion would send a few people over, test the purity of the metals, make sure they were minted correctly, and then declare them as approved for general usage – all for a small cut. Rex Germaniae got to make themselves a stack of cash, the Abyss Auction knew they were working with the real deal and Fusion got some money for very little work. They all won. Some more than others, but they all won.

Fusion would always be the main supplier of the currency; they were simply best positioned to that end. Where other people wanted to pitch into that supply, that had to be accepted and they were best advised to take the role of quality control. Even better would be if they could just buy the metals of the would-be minters in exchange for the paper currency. That would be a net zero for Fusion in terms of money, but they would keep a greater amount of control. Larger guilds were unlikely to play along with something like that unless they needed the money really quickly.

There were many other things that this transition would put into motion. Rival currencies would rise between step 2 and 6, without a doubt. Keeping Dramar on his side during that stretch would be vital to Fusion’s money to be the one that became the global currency. All of this may have been the black dragon’s suggestion, but once the ball was rolling and the new currencies all followed the principle of anchored value, there was no reason for the founder of the Abyss Auction to shackle himself to John. Only honour and practicality would keep the businesslizard on the Gamer’s side and he had a feeling Dramar had a lot more of one than the other.

They were shaking up global trade practices. There were all kinds of chips that could fall.

“I think that concludes what we needed to say,” John ended the discussion with a happy smile regardless. He had enough faith in this operation to warrant some cautious optimism. “If you don’t mind, I have to draft some legislation and spread it to the right people.”

“Just one thing,” Dramar stopped him. “You haven’t given it a name yet.”

“Huh,” John let out a surprised sound. “No... I haven’t...”

Somehow, that hadn’t come up in the entire discussion. They had discussed theoreticals and schemes. Giving this currency a name would make it more real than it had warranted throughout all of that. Now that they were certain what they wanted to do and how to go about it, a name was more than appropriate. He thought about it. What was a good name for Fusion’s new currency?

The jester inside him wanted to call it a Thorn, in reference to Scarlett. That was a rather unfriendly name for a currency, however, and he shouldn’t create such an obvious pointer at this secret they were still keeping from the public. Raves may have worked for the colour scheme of the coins, but was also too straightforward and his girlfriend would keep complaining about it. Haremoney? Odd to pronounce and too specialized again. Something simpler was better. Fusion Coin was too simple. Fused Coin had the same issue. Fusion Dollar? Uncreative. Fusion Taler? Forcefully foreign. He continued to think and then the epiphany came. It was obvious. He was the Gamer, there was one name that was doubtlessly appropriate for any game currency.



“The Token,” he decided.