To understand the mystery here, we have to start with the origin of "bank bills". The so-called "bank bills" are actually a kind of "quasi-banknotes" born in the era of the gold standard to adapt to the prosperity of the commodity economy. Compared with heavy metal money, "bank notes" can bring great convenience to business activities.

For example, Mr. John, the owner of the bakery, wanted to buy Mr. George's bakery on the street and turn it into his own branch, so he went to Mr. Will's bank and asked for a loan of 1,000 gold coins. Mr. Weir offered Mr. John two ways of borrowing: the first was to lend him 1,000 gold coins directly and carry them in his pocket; The second way is for Mr. Will to write him a cheque with a face value of 1,000 gold coins, which is called a bank note, which Mr. John can exchange for real money at any time.

At first, Mr. John may doubt the credibility of that thin piece of paper, and would rather choose to take real money, but 1000 gold coins are quite heavy, cumbersome and unsafe to carry around, and there is also a problem that the texture of gold coins is relatively soft and easy to wear, and the gold coins borrowed from the bank are often new coins, and the ones recovered from the market are bad coins that are worn out or even deliberately cut off the corners, and the bank is unwilling to suffer a loss, and the bad money must be discounted when the loan is repaid, and this loss must also be borne by the borrower.

In contrast, it is convenient and safe to trade bank notes directly, and there are no wear and tear issues, so if Mr. John's counterparty, Mr. George, is also willing to accept bank notes, then trading directly with bank notes is a more sensible choice.

Normally, the counterparty of the lender also has to deal with the bank, for example, Mr. George sells his bakery to Mr. John, and the income from the sale of his bakery to Mr. John will be deposited in the bank for interest, and as long as Mr. Will's bank accepts the bank notes issued by himself, he will also be happy to accept this kind of "paper money" as a substitute for real money, so the bank notes enter circulation.

According to the above-mentioned circulation phenomenon, it is not difficult to find that bank notes are a kind of bank-accepted checks, a kind of debt certificates, which are essentially the same as paper money.

Bank notes have been similar to paper money since their inception, but there are some differences from paper money until they eventually evolve into paper money. For example, people do not receive interest income when they hold paper money, a $100 bill is still $100 for a whole year in a wallet, and some types of bank notes have an interest rate. Since interest can be generated, technical issues such as discounting should be considered in the circulation of bank bills...... But these are all minutiae and irrelevant.

The biggest mystery of bank notes is that their "promise" that they can be exchanged for gold and silver at any time equal to their face value is a very ingenious psychological scam. In real economic life, as long as people believe that this piece of paper with printed patterns can be exchanged for real money at any time, there is no need to really exchange it for gold and silver that is heavy and cumbersome and difficult to keep, and it is obviously more convenient to directly use bank bills as a means of payment.

Based on this consensus, bank bills become a de facto credit currency. It was from this point on that bank notes took the most crucial step towards becoming paper money.

Compared with paper money after the collapse of the Bretton Woods system, the credit of bank bills issued by private financial institutions is not guaranteed by the government, nor can it be enforced by state power, and the reason why it can be circulated in the market and generally accepted is that people believe that the bank that issued the bank is honest enough to believe that the bank that issued the bank has gold and silver in its vault at least equivalent to the total face value of the bank notes issued by the depositor for exchange at any time, but this is only an imagination, is this really the case?

It may be true that there are honest bankers who issue as many bank notes as they have in gold and silver reserves, but when the bankers suddenly discover the secret that even if the bank notes he prints are beyond the gold and silver reserves, people will not find out, and they still trust and are willing to accept the excess bank notes. In the face of this huge temptation to "turn paper into gold", how many bankers will be able to uphold integrity?

All bankers swear to be honest, but the reality is that the total face value of the banknotes in circulation is more than ten times more than the combined gold and silver reserves of all banks. It is conceivable that the credit of the bankers is as insignificant as the bank bills they issue, and once this soap bubble full of lies is punctured, the bank bills will depreciate sharply due to the run, and the banks will not escape the doom of bankruptcy.

That's it?

No, an even greater catastrophe is yet to come.

As soon as one bank goes bankrupt, people will suspect that the same scam exists in the bank notes of other banks, and they will rush to exchange the bank notes in their hands for more reliable real money to protect the property from depreciation.

Unfortunately, the suspicions often hit the nail on the head, and the other banks did not have enough money to deliver on their promises, so one bank after another died in a run, and the panic snowballed, eventually involving all financial institutions and turning into a financial collapse that affected the whole of society.

Roland's ultimate goal is to prohibit private banks from issuing bank bills and to have the central bank issue paper money in a unified manner, but it should not rush and take it slowly, step by step, and try to avoid a negative impact on the domestic financial order.

The first step in boiling a frog in warm water is to establish a reserve system. The central bank acquiesces that private banks have the right to issue bank bills, but cannot tolerate unlimited over-issuance and indiscriminate issuance, and requires that at least 50% of the gold and silver reserves behind each bank bill must be guaranteed, that is, the bank bills must have at least half of their face value of gold (silver).

It's easy to set rules, but the question is how to monitor private banks for irregularities. If it is on the earth, this will involve a big drama of auditing and accounting, auditing and false accounts, and in the end, most of them will be one foot higher than the devil, and those who audit the accounts will never win the fake accounts, and the supervisors will never be able to defeat the loopholes......

But in the world of Vares, things are very different. Don't forget, this is a world where true gods and magic exist.

Is it hard to audit accounts? It's really hard and involves a lot of data calculations. But if you have a "see through the lie" scroll in hand, or if you can cast the "domain of honesty", what if you can't read the balance sheet? Bank bosses, executives, accountants, and cashiers are all interrogated in isolation, and they don't believe that all of them have an iron will, and all of them can deceive the magic of seeing through lies. As long as one person confesses, and the radish is brought out of the mud, the violations of the other people involved in the case will also have nothing to hide.

The spell was so unreasonable, simple, crude, but effective – that was why Roland had recruited a group of Sindra priests to attend the accounting training and appointed him as the central bank's auditor.