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Schiltz, Michael. "An ideal 'bank of issue': the Banque…

- - - - in finance: Japan models itself after Belgium and its central bank
        
        Reason: during Matsukata's stay in France, the French minister for Finance, Léon Say, recommends emulating the Belgian National Bank instead of the French one
        
        matsukata sends Kato Wataru to Belgium to study the BNB, resukting in the establishment of the bank of Japan (BOJ), where he eventually leads the banking department
        
        another factor: scepticims around a bimetal system that occured in the Latin Monetary Union (p.184)
- - - - the paper however argues that no specific national bank per se was used as a model to emulate, instead Matukata was focused on the overall financial infrastructure of Japan (rather than his scope being limited to the establishment of the BOJ)
        
        Matsukata's own works showcase this argument, for example by analyzing the price of rice or other topics related to finance as a whole, not just monetary policy or central banking (p.184)
        
        these works showcase what Matsukata believes to be a cause-and-effect relation between the problems Japan was facing at the time, and how these problems have a strong correlation to each other
        
        his solution to all of these interrelated problems at once: create a strong central bank, following the European example--> specifically shown in 'The Report on the Adoption of the Gold Standard in Japan'(1899)
        
        Before the establihsment of the BOJ, Matsukata speaks of a form of 'financial feudalism' in which small amounts of capital were managed by small banks with a narrow circle of influence--> compared to a feudal lord who only sees his castle and domain, but not the larger picture
        
        his argument: create a system of stronger banks with frequent communication that foster 'national consciousness'and have a broader scope that increases national unity and the necessary circulation of money (p.187)--> comparison to the metaphorical human body
        
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        While the BNB served as a template for the BOJ, there are some differences in their operations:
        
        the BOJ did not adopt he BNB's practice of counting foreign bills of exchange in its reserve towards its foreign exchange rate. In fact the BOJ did not engage in forex at all ---->instead outsourced this to the YSB (Yokohama Specie Bank)
        
        the circulation of commerical bills was low compared to the BNB, therefore--> the government published regulations surrounding their use and even tought government-owned factories how to handle transactions with bills
        
        the practice of saving eventually became an area of particular innovation--> = the emergence of the postal savings system (quite unique to Japan)
- - - - unique innovations: fixed conversion rate of Japanese silver coins into Gold coins--> shattered by international treaties (opening up its markets to the world so suddenly) (cf. reading on the Yokohama Gold Rush)
        
        led to the debasement of the Japanese currencies and therefore soaring inflation as gold was leaving the country at a rapid pace
        
        Attempt to get the situation under control again: adoption of the modern yen and reorganisation of the ryogae into a joint-stock company--> fails
        
        Attempt: establishment of a system of national banks following the american system and National Currency Act--> also fails
        
        other factors: trauma with foreign dependence and lack of trust in international partners (e.g. the Lay Affair)
  - - - inspiration and slogan that persisted for a long time, even to the Imperial times after the Taisho democracy
      - results in a "Meiji-twist"on social darwinism--> Japan had to adopt foreign knowledge, but imbue it with the traditional Japanese soul in order to eventually surpass the West (p. 183)
        
        additionally, the observation of the German Empire following the Franco-Prussian war and its ability to 'convert' its military strength into financial strength reinforced this Darwinistic mindset (p.184)
        
        Japan then essentially did the same after the Sino-Japanese war and succesfully adopted the Gold-standard following its treaty to receive war reparations from China in Gold