Chapter 2515
Lin Qi had previously brought up the idea of cross-holding shares with the Federal Savings Bank. For this, he was even willing to pay extra.
But the Federal Savings Bank would rather spend more money than make a profit—or, to put it another way, let go of its shares.
The issuing bank carried tremendous weight within the entire monetary system. It could be said to be the rule-maker of the financial game. Moreover, whenever it adjusted the rules of the game, it would face no resistance whatsoever!
For example, when the Federal Savings Bank believed the market was overheating, all it had to do was raise interest rates to cool the market down quickly!
Whether it was the Financial Market or socioeconomic development, both were extremely sensitive to changes in interest rates.
However, many people—especially young people and those without a habit of saving—were not as sensitive, because they had no intuitive understanding of it.
Its effects were mainly seen in two areas.
First was its impact on financial businesses.
For example, the current annual savings interest rate at the Federal Savings Bank for a one-year term was 7.89 percent. In other words, if someone deposited one hundred dollars in the bank, they would have one hundred seven dollars and eighty-nine cents by the end of the year, principal and interest included.
Did that look like very little? It certainly did. To ordinary people, that amount truly meant nothing.
But for some large financial institutions, if their investment return was only slightly higher than that figure while the risks they bore exceeded the returns, they were very likely to deposit some of their funds in the bank as a safety net.
As a result, the amount of cash they invested in the Financial Market would decrease, and investment