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The Yokohama Specie Bank: Gold, Silver, and Imperial Finance - Coggle…

- - - - exposed the incompatibility between Japan’s domestic monetary system and the global monetary order
  - - - Failed, led to bankruptcy just one year after its founding
  - - - The goal of turning the yen into an international “intermediary currency.”
    - - Tasked with supporting Japan’s nascent export industries, primarily silk and tea
      - Purchased bills of exchange from producers using Bank of Japan (BOJ) banknotes.
      - These bills were sent to agents in London or Lyon for collection.
      - The proceeds were converted into gold bullion and returned to YSB headquarters.
      - Obtained metals then handed over to the government, contributing to the reserve fund backing the BOJ’s silver-convertible notes.
      - Called "goyō gaikoku nigawase-tegata"
- - - - Ensure that at the total amount of purchased bills and sold bills across the entire network of branches remained equal.
    - - Branches engaged in swap transactions, offsetting future cash flows with contracts maturing on the same day
    - - Branches avoided currency risk and protected their working capital.
      - Gains or losses in aggregate assets and liabilities in silver-area branches were canceled out by corresponding losses or gains in gold-area branches.
  - - - sophisticated mechanism to protect the yen’s value and prevent gold outflows
- - - - “independence of armaments” (gunki no dokuritsu)—or in modern terms, “domestic industrialization” (kokusanka)
      - By 1914, China had become "the propelling power of YSB’s exchange cycle"
- - - - Colonial monetary system
      - “Inflationary capital”
        
        issuing large quantities of new, non-convertible yen to purchase goods and services needed by the military in occupied territories.
      - Exploitation
        
        denied access to foreign exchange that could have supported their own development
      - Consequence
        
        Entire war effort was financed through exploitation of occupied regions, explaining the stark inflation gap between mainland Japan and the empire’s overseas territories
- - - - Rendered the yen completely illiquid outside the Yen Bloc, suffocating Japan’s import-dependent economy.
      - Japan viewing the freeze as an existential threat, chose the path of war in the Pacific.