Plummeting Integrity

"How is it possible that the Moxi Duchy can hold out?"

"I can't believe it, "Caesar IV asked.

He had originally planned to share his misfortune with others, and he was mentally prepared to simply lie down if a run on the bank broke out.

Unfortunately, the debt crisis worsened, and an ally who was expected to default on his debts surprisingly came to tell him that he could weather the crisis.

If the Moxi Duchy can hold on, then it's truly unacceptable for the Alpha Kingdom to default on its debts.

"Your Majesty, we have confirmed this repeatedly. The Moxi Duchy is mobilizing nobles throughout the country to raise funds, and has also sent people to communicate with creditors. It is said that good results have been achieved."

Several nobles have already stated that they will not demand early redemption before the agreed-upon date of the bonds.

The first nobleman to take the lead was the Count Hudson. He not only announced that he would not redeem the bonds early, but also successfully persuaded a group of nobles in the expeditionary force to make the same commitment.

Influenced by these positive news, war bonds, which had been plummeting, have rebounded slightly.

Especially the bonds of the Moxi Duchy, the amount circulating in the market has decreased significantly. It's estimated that everyone is waiting to see how things develop, since selling at the current price would mean a huge loss.

Upon hearing Count Francis's words, Caesar IV was momentarily at a loss for words: whether to praise Hudson for his broad vision or to berate him for being so focused on self-promotion that he forgot the kingdom was also mired in debt and needed support.

Despite his thoughts, Caesar IV ultimately didn't voice them. He was well aware that the Moxi Duchy was simply unable to repay its enormous debts, and even if he went there with the bonds to demand early redemption, he wouldn't get any money in return.

Bonds that cannot be converted into cash are naturally not considered money. Given the reputation of the Moxi Duchy, it's unrealistic to expect them to use their bonds as cash to help the Alpha Kingdom overcome its difficulties.

Since it's impossible to immediately pay out cash, it's best to be generous and do the Moxi Duchy a big favor.

If market confidence is stabilized and the Moxi Duchy manages to weather this storm, then the Alpha Kingdom will also be saved.

Hudson's actions were perfectly reasonable, but if the other creditors of the Moxi Duchy did the same, it would seem overly reasonable and somewhat illogical. However, the facts were undeniable, leaving him no choice but to believe it.

"In that case, let's raise the money quickly! On the issue of repayment, we should stand with the Moxi people. As long as they can hold on, we will hold on with them."

However, the specific redemption date must be postponed as much as possible, preferably after the Moxi people.

If anyone outside causes trouble, tell them we're busy raising money and to wait patiently.

Clearly, Caesar IV's concerns have not disappeared. While the Moxi people have made some progress in repaying their debts, whether they can weather the crisis remains to be seen.

If the restrictions on redemptions are lifted, the kingdom's meager cash flow will quickly run out. The crisis then will only be greater.

"Your Majesty, we can adopt the same measures as the Moxi people. It's not difficult to gain the support of the nobles in the country; the difficulty lies in the fact that they don't have much money in their pockets."

The nobles in the north of the kingdom are mostly poor and have no money to spare; the nobles in the south are wealthier, but they are currently busy building defenses and probably cannot provide much support to the kingdom.

The most crucial step now is to persuade creditors not to run on the bank. Judging from the case of the Moxi Duchy, success is still possible.

After all, if they demand repayment now, we'll be forced into defaulting on our debts, rendering all their bonds worthless, and they won't even get a single gold coin!

Marquis Delgado's analysis immediately calmed Caesar IV down. Logically, the problem was solved.

Following this line of reasoning, the creditors of the Moxi Duchy agreed to waive early repayment not because they were particularly reasonable, but because they did not want their bonds to become worthless.

"Having too many lice doesn't make you itch, and having too much debt doesn't make you worry."

If Alpha Kingdom were to follow suit and directly explain the consequences to its creditors, most of them would probably have no choice but to accept it reluctantly.

"Hmm, let's give it a try! If the Moxi people can do it this way, then there's no reason for us to fail. The only problem is the mastermind behind it all."

Judging from the current situation, it is clear that someone is deliberately trying to disrupt the bond market at any cost, attempting to force us to default on our debts.

The Moxi people suspect the Church is behind it; although there is no concrete evidence, they certainly have a motive to do so.

Keep a close eye on the Church; if they continue to cause trouble, it will be a huge problem.

"It is a dark look on Caesar IV's face," he said.

Now he finally understood why his father hated the Church so much; it was all because those guys were doing inhuman things.

Other countries may not want Alpha Kingdom to grow too powerful, but they all have their own moral bottom line. At most, they will only fan the flames from behind, without directly stabbing it in the back.

Otherwise, if all countries work together to collect the debt, the Alpha Kingdom will go bankrupt before a run on the bank even begins.

The crisis continues to rage, and driven by panic, more and more creditors are demanding early repayment.

Unsurprisingly, Alpha Kingdom's public relations campaign ended in failure.

Domestic nobles expressed their support, but it was all just talk. In practice, only Hudson actually went to buy the bonds; the others only made token gestures.

The threat of giving up might work on ordinary creditors, but the Church, which instigated this turmoil, doesn't care at all whether its bonds will become worthless.

One by one, fake accounts acted as the vanguard, and the creditors who were initially somewhat interested joined the debt collection campaign again.

On the last day of 99991, the run on the bank finally broke out in full force, and the embassies of the Alpha Kingdom and the Moxi Duchy were completely surrounded.

The difference is that the creditors who besieged the Moxi Duchy finally reached an agreement after rounds of negotiations.

The creditors who were besieging the Alpha Kingdom remained deadlocked, but their emotions were inevitably affected.

If it weren't for someone constantly encouraging and exaggerating the risk of default, everyone would probably have chosen to compromise. After all, the annual bond interest payments are still being made on time.

Upon receiving the news atop the sacred mountain, the Pope Pius VII was furious!

"Is this the result of your actions?"

The huge sums of money we spent and the resulting bank run we triggered were just a temporary commotion.

What about the Moxi Duchy?

You kept saying they would definitely default, so how come you reached an agreement with the creditors first and got out of the debt crisis?

..."

The almost furious questioning caused all the high-ranking officials of the Church to bow their heads. Everyone loves doing things that use public funds.

This operation was a joint effort by multiple departments of the Church. Precisely because so many people were involved, and so many people were trying to profit from it, some problems inevitably arose in terms of its effectiveness.

"Your Majesty, we have limited funds, all of which have been spent on suppressing the Alpha Kingdom, neglecting the even more financially strained Moxi Duchy."

Unexpectedly, they turned a seemingly hopeless situation into a viable one.

It is said that at the negotiation site, the Moxi people directly presented two options: either make payment as scheduled on the agreed date, or they would immediately declare a debt default.

Without our people causing trouble, those creditors, not wanting to receive no gold coins at all, were forced to accept normal repayment.

Influenced by this news, the Alpha Kingdom suddenly became more assertive. They agreed to redeem the bonds early, but demanded the deduction of previously settled interest, bond issuance costs, and fundraising fees...

After a series of miscellaneous deductions, they only accept 80% of the face value for redemption, and you have to apply a month in advance and get approval before you can receive the redemption.

Many creditors wavered, believing that if the Moxi Duchy could overcome the debt crisis, the Alpha Kingdom, with its even better financial situation, would certainly be fine.

All of our people have submitted applications, but that's not enough.

In an effort to create panic, we sold off a significant amount of bonds a few days ago, and we now hold less than 100,000 war bonds.

It's estimated that the situation is similar in other departments; even if everyone's war bonds are combined, they might not be able to raise a face value of one million.

To cripple Alpha Kingdom's finances, we would need to collect more bonds from the market and trigger a run on them, depleting their cash flow.

However, after the Moxi Duchy overcame its debt crisis, the price of war bonds in the Alpha Kingdom also began to recover, rising from half of the previous lowest market price to the current 88% of the face value.

Early high-yield bonds have already reached par value, or even exceeded it.

Blake didn't want to step forward, but Pope Pius VII his name, leaving him no choice but to accept.

The previous bond sell-offs were all gradual declines from high levels, so there weren't many losses.

If we were to buy them back from the market now and then try to redeem them with the Alpha Kingdom, we would definitely lose money.

It may seem like they won't lose much, but once they enter the market on a large scale to make acquisitions, the market price will definitely be driven up.

"Idiot! Now that you know what to do, what are you standing there for? Hurry up and send someone to carry it out!"

Even if it costs another million or two gold coins, as long as it damages the reputation of the Alpha Kingdom, it's all worth it.

"I don't care what methods you use, you must acquire their war bonds as quickly as possible and then immediately take them to them for redemption."

Pope Pius VII cursed angrily.

Political considerations are never simply about economic interests. Sometimes, even mutually destructive tactics must be persisted with.

Losing one million gold coins and depleting the Alpha Kingdom's cash flow of ten million gold coins is a strategic success.

There was no other way; after conquering the Ruthenia Kingdom, the Church would face a strategic choice: whether to advance south or north.

Of course, they could also choose to invade the central continent. However, the central continent is too crowded, and none of the countries in the central continent are easy targets, let alone a land of constant warfare.

Compared to the Frankish Kingdom and the Iberian Kingdom in the Southern Continent, the countries in the Northern Continent are clearly easier to bully.

If the original conflict with the Alpha Kingdom was due to hatred and contradictions, it has now escalated to a strategic level. After all, Caesar IV's questionable actions have given the Church the possibility of annexing the Ruthenia Kingdom.

In the Mountain Territory, Hudson has already begun preparing a victory celebration.

Because of excessive human interference, the market panic did not last long. In particular, after the Moxi Duchy stabilized, the chambers of commerce cooperating with Hudson also realized the business opportunity and joined the rush to buy bonds, further driving up market prices.

Once the Church joined the buying frenzy, Hudson, realizing the buying opportunity had ended, immediately ordered a halt to the operation.

Of the two million gold coins prepared in advance, only one million six hundred thousand were spent, but this did not affect the success of this speculation in the slightest.

As the first to act, Mountain Territory clearly got the biggest slice of the pie.

Buying bonds with a face value of 2.5 million gold coins for 1.6 million gold coins, even if you immediately resell them at the current market price, you can still make a profit of hundreds of thousands.

Moreover, due to the first-mover advantage, 40% of the 2.5 million bonds are high-interest bonds with an annual interest rate of 10%.

Once the market stabilizes, the ordinary bonds will be sold off one by one, and the principal will be recovered. The rest will be pure profit.

Although we are still a few hundred million short of our initial goal of earning enough money to build docks and shipyards, it doesn't matter much.

Having weathered this shock, Alpha Kingdom faces no risk of default in the short term, and holding high-yield bonds to enjoy returns over several years is a good option.

At least in terms of return on investment, bond yields are much higher than those from farming. Until a better investment opportunity emerges, this is a good business.

Hudson was making a killing, while the Treasury Department was weeping. The crisis in the Moxi Duchy was over, but the troubles in the Alpha Kingdom continued.

The eight million in cash that the kingdom had painstakingly raised was quickly cashed out. If it weren't for the one-month grace period, they probably would have been bedridden by now.

"What's going on? Hasn't the market recovered? Why are there still people running on the bank?"

Caesar IV asked with a puzzled look.

Although bond prices vary across regions, they are generally trending upwards. Looking at the big picture, a return to normal prices is only a matter of time.

If the market price is higher than the early redemption price, then using the bonds to make redemption is clearly a lose-lose situation.

Even if the amount held is huge, it can be sold off gradually. There's no need to suffer losses and fight tooth and nail with the Kingdom's Treasury Department.

"Your Majesty, the Church has made its move. This time they're not even bothering to cover it up; their goal is simply to deplete our cash flow."

The Treasury Department originally intended to secretly sell a batch of the recalled bonds to profit from the market, but due to intense external scrutiny, we had no choice but to publicly destroy the recalled bonds in order to stabilize market confidence.

To stabilize the situation, the only option now is to seek help from outside. The Treasury Department has already contacted major chambers of commerce, and they have promised to lend funds, although their demands seem a bit too high.

Now it depends on how much loss the Church is willing to bear. If they fight us to the death at all costs, the ensuing run will be even more severe.

Marquis Delgado's explanation infuriated the kingdom's high-ranking officials. The Church's audacity in buying bonds from the market to pay off the debt was utterly shameless.

But there was no other way. In order to stabilize market confidence, even if Alpha Kingdom was penniless, it had to pretend to be very wealthy.

"Then let's just wait and see!"

The Church wants to buy bonds from the market, so let them have their way. The bonds recalled by the Treasury Department will continue to be publicly destroyed; I'll figure out a way to cover the funding shortfall.

I remember that the royal family still had more than three million war bonds, which they arranged to sell to them in batches, and then lent the proceeds to the kingdom.

If that's not enough, we can contact the nobles in the country and resell them for profit. Let's see who can outlast whom!

We mustn't cut off contact with the Church of Commerce either. We need to deliberately create the impression that we're almost exhausted, so they'll increase their investment!

"Caesar IV I said angrily."

He's not going to care about integrity anymore. If the Church dares to do the first thing, he dares to do the fifteenth.